Scandinavian Working Papers in Economics

Konkurrensverket Working Paper Series in Law and Economics,
Konkurrensverket (Swedish Competition Authority)

No 2013:2: Merger Simulation with Nested Logit Demand - Implementation using Stata

Jonas Björnerstedt () and Frank Verboven ()
Additional contact information
Jonas Björnerstedt: Swedish Competition Authority, Postal: 10385 Stockholm, Sweden
Frank Verboven: University of Leuven, Postal: Department of Economics, University of Leuven, Naamsestraat 69, B-3000 Leuven, Belgien

Abstract: In this article we show how to implement merger simulation in Stata after estimating an aggregate nested logit demand system with a linear regression model. We also show how to implement merger simulation when the demand parameters are not estimated, but instead calibrated to be consistent with outside information on average price elasticities and profit margins.

Keywords: mergersim; merger simulation; aggregate nested logit model; unit demand; constant expenditures demand

JEL-codes: C63; C87; D40; L10

20 pages, April 15, 2013

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working_paper_2013-2.pdf PDF-file 

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