Econometric Methods in Staples
Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)
Jonathan B. Baker
American University - Washington College of Law
Trinity College - Department of Economics
Daniel S. Hosken
Government of the United States of America - Federal Trade Commission
April 9, 2004
Princeton Law & Public Affairs Paper No. 04-007
Econometrics played a major role in the investigation and litigation of the Federal Trade Commission's successful challenge to the proposed merger between two office superstore chains, Staples and Office Depot. Our goal in writing this essay is to describe the econometric issues at stake in evaluating the FTC's central claim that the price charged by office supply superstores was related to the number and identity of superstore firms participating in the market. Similar statistical models were relied upon by the FTC and the merging firms to analyze pricing. Our discussion of these models highlights the advantages and disadvantages of alternative approaches to analyzing a panel data set: cross-sectional estimates versus fixed effects estimates. We also describe and evaluate modeling choices that appeared to have substantial influence on the empirical results.
Number of Pages in PDF File: 21
JEL Classification: K22, L40, L81, C24working papers series
Date posted: July 9, 2004
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