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Using Cost Pass-Through to Calibrate Demand

Nathan Miller, Marc Remer and Gloria Sheu
Additional contact information
Nathan Miller: Economic Analysis Group, Antitrust Division, U.S. Department of Justice

No 201209, EAG Discussions Papers from Department of Justice, Antitrust Division

Abstract: We demonstrate that cost pass-through can be used to inform demand calibration, potentially eliminating the need for data on margins, diversion, or both. We derive the relationship between cost pass-through and consumer demand using a general oligopoly model of Nash-Bertrand competition and develop specic results for four demand systems: linear demand, logit demand, the Almost Ideal Demand System (AIDS), and log-linear demand. The methods we propose may be useful to researchers and antitrust authorities when reliable measures of margins or diversion are unavailable.

Pages: 12 pages
Date: 2012-10
New Economics Papers: this item is included in nep-com and nep-ind
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Citations: View citations in EconPapers (3)

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https://www.justice.gov/atr/public/eag/288257a.html (text/html)

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Journal Article: Using cost pass-through to calibrate demand (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:doj:eagpap:201209

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