Calibrating the AIDS and Multinomial Logit Models with Observed Product Margins

We show how observed product margins may be used in lieu of an observed market elasticity to calibrate parameters for two commonly used demand forms: the Almost Ideal Demand System (AIDS) and the multinomial logit. This technique is useful for antitrust practitioners interested in simulating the e ects of a merger, since estimates of product margins are often easier to obtain than estimates of market elasticities.

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Year of publication:	2012
Authors:	Sheu, Gloria ; Taragin, Charles
Publisher:	Washington, DC : U.S. Department of Justice, Antitrust Division, Economic Analysis Group (EAG)
Subject:	demand calibration \| multinomial logit \| almost ideal demand system \| AIDS

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Series:	EAG Discussion Paper ; EAG 12-7
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	745004326 [GVK] hdl:10419/202400 [Handle] RePEc:doj:eagpap:201207 [RePEc]
Classification:	L40 - Antitrust Policy. General ; K21 - Antitrust Law
Source:	EconStor

Persistent link: https://www.econbiz.de/10012056334