A PYMNTS Company

Merger Simulation with Nested Logit Demand – Implementation using Stata

By  |  September 17, 2013

Posted by D. Daniel Sokol

    Get the Full Story

    Complete the form to unlock this article and enjoy unlimited free access to all PYMNTS content — no additional logins required.

    yesSubscribe to our daily newsletter, PYMNTS Today.

    By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions.

    Jonas Bjornerstedt (Swedish Competition Authority) and Frank Verboven (University of Leuven) discuss Merger Simulation with Nested Logit Demand – Implementation using Stata

    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.