Quantitative Techniques for Competition and Antitrust Analysis_10 pptx
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Quantitative Techniques for
Competition and Antitrust Analysis
8 1. The Determinants of Market Outcomes
Demand at ... since understanding these
key elements of economic analysis is crucial for an appropriate use of quantitative
techniques.
1.1 Demand Functions and Demand Elasticities
The...
Quantitative Techniques for Competition and Antitrust Analysis_2 ppt
... result from a brand’s image.
Suppose we face a market with two differentiated goods and the following linear
demand system:
Demand for good 1: q
1
D a
1
b
11
p
1
C b
12
p
2
;
Demand for good 2: ... generally used model for differentiated product industries. It is, for example,
used in particular to model competition in markets for branded consumer goods.
1.3.2.4 Price Competi...
Quantitative Techniques for Competition and Antitrust Analysis_3 docx
... “reduced-form” equations. Estimating a reduced
form for market prices and quantities will require data on equilibrium prices and
quantities in that market as dependent variables and then observed demand ... Doing
so, according to the standard OLS formula would dramatically reduce the uncer-
tainty and standard errors of the OLS estimates, yet clearly there is no real new
information...
Quantitative Techniques for Competition and Antitrust Analysis_6 docx
... consider any two
normal goods, say cars and holidays. When the economy is good we will tend to see
high demand, and hence high prices, for both cars and holidays and yet, of course,
we would not want ... marginal
customers—those for whom store A and store B are pretty close substitutes for one
another but before the price rise at A there was a small preference for going to A...
Quantitative Techniques for Competition and Antitrust Analysis_10 ppt
... Without information about costs, the only market events that one could use
for identification are changes in demand. In this section and the next we consider
respectively demand shifts and demand rotations ... the pricing and demand equations and the
conduct parameter remains that we can find (i) a supply shifter that allows us to
identify the demand curve, the parameter ˛
1
, and (...
Quantitative Techniques for Competition and Antitrust Analysis_16 pptx
... this chapter. Before doing so we briefly
discuss informal and semiformal quantitative methods for evaluating the incentive
for foreclosure.
10.1. Rationales for Vertical Restraints and Integration ... demand specifications.
10.2. Measuring the Effect of Vertical Restraints 519
10.2.1 Informal and Semiformal Analysis of Incentives
Informal quantitative analysis can sometimes be i...
Quantitative Techniques for Competition and Antitrust Analysis by Peter Davis and Eliana Garcés_2 pptx
... in
Fisher (1980, 1986) and Finkelstein and Levenbach (1983). For more general econometrics texts, see, for
example, Greene (2007) and Wooldridge (2007). And for an advanced and more technical but ... “reduced-form” equations. Estimating a reduced
form for market prices and quantities will require data on equilibrium prices and
quantities in that market as dependent varia...
Quantitative Techniques for Competition and Antitrust Analysis by Peter Davis and Eliana Garcés_3 pptx
... caused by movement in costs (which is
in addition to any variation in prices explained by movements in the demand curve
caused by the exogenous demand shifting variables X
2
).
Standard errors and ... price and
quantity data alone it is impossible to empirically quantify the effect of an increase
in prices on the quantity demanded and therefore to extract information such as the
d...
Quantitative Techniques for Competition and Antitrust Analysis by Peter Davis and Eliana Garcés_8 pptx
... to allow for
firm heterogeneity and Mazzeo (2002) and Seim (2006) extended the analysis and
estimation of entrygames to allow for product differentiation. Davis (2006c) allowed
for some forms of ... jurisdictions.
4
See, for example, the work by Sutton (1991), Klepper (1996), and Klepper and Simons (2000), and
in the strategy literature see Markides and Geroski (200...
Quantitative Techniques for Competition and Antitrust Analysis by Peter Davis and Eliana Garcés_15 pptx
... 519
10.2.1 Informal and Semiformal Analysis of Incentives
Informal quantitative analysis can sometimes be insightful for evaluating the incen-
tive for foreclosure. An example of such an analysis ... strategies in the rest of this chapter. Before doing so we briefly
discuss informal and semiformal quantitative methods for evaluating the incentive
for foreclosure.
10.2. Me...
Quantitative Techniques for Competition and Antitrust Analysis_1 pptx
... quantity produced
and input prices so will take the form
C D C.Q;p
1
;:::;p
m
;uI˛/:
Input demand schedules relate the optimal demand for inputs to the quantity pro-
duced and the input prices ... understand this minimization problem first note that the observed data are the
inputs and output levels for each firm and that the nonnegative weighted sums
P
n
iD1
i
q
i
and
P
n
iD1
...
Quantitative Techniques for Competition and Antitrust Analysis_2 pptx
... prices
and wrongly conclude that the products are not related.
4.2.4 Rival Cost and Demand Data for Price Correlation Analysis
As in all quantitative analysis, one cannot draw more information ... marginal
customers—those for whom store A and store B are pretty close substitutes for one
another but before the price rise at A there was a small preference for going to A.
On the...
Quantitative Techniques for Competition and Antitrust Analysis_4 pptx
... the size of the market, a and b are demand parameters, and c and d
are the cost parameters. The demand and costs parameters are unobserved and their
effect is therefore included in the error ... individual demands and S identical consumers so that the
market demand is Q
Demand
Market
D S.abp/ and that equilibrium price p
is determined
by the intersection of supply and deman...
Quantitative Techniques for Competition and Antitrust Analysis_10 pptx
... alternative functional form. For
example, Berry et al. (1995) believe that the demand for a type of car will depend
on a consumer’s level of income and work with the natural logarithm formulation,
v
j
.y ... elasticity of segment
demand is 2:6 for premium beer, 2:7 for popular beer, and 2:4 for light beer.
These price elasticities could be used as important evidence toward a...
Quantitative Techniques for Competition and Antitrust Analysis_11 pptx
... generating good outcomes for consumers. On the other hand, vertical
restraints and integration can generate harm to consumers and therefore form a
legitimate focus of attention for a competition authority.
10.1.1 ... be much higher for high-end
BMWs and Lexuses than for low-end Mazdas and Fords.
9.3 Demand Estimation in Merger Analysis
The above introduction to the common mo...