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http://ssrn.com/abstract=2175096
 
 

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Using Cost Pass-Through to Calibrate Demand


Nathan H. Miller


U.S. Department of Justice

Marc Remer


United States Department of Justice

Gloria Sheu


Government of the United States of America - Department of Justice

October 2012

Economic Analysis Group Discussion Paper EAG 12-9

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 specific 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.

Number of Pages in PDF File: 10

Keywords: cost pass-through, demand calibration, merger simulation

JEL Classification: K21, L13, L41

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Date posted: November 15, 2012  

Suggested Citation

Miller, Nathan H. and Remer, Marc and Sheu, Gloria, Using Cost Pass-Through to Calibrate Demand (October 2012). Economic Analysis Group Discussion Paper EAG 12-9. Available at SSRN: http://ssrn.com/abstract=2175096 or http://dx.doi.org/10.2139/ssrn.2175096

Contact Information

Nathan H. Miller (Contact Author)
U.S. Department of Justice ( email )
450 Fifth St. NW
Room 9418
Washington, DC 20530
United States
Marc Remer
United States Department of Justice ( email )
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001
United States
Gloria Sheu
Government of the United States of America - Department of Justice ( email )
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