An Econometric-Driven Merger Simulation: Considerations and Application

12 Pages Posted: 23 Aug 2006 Last revised: 17 May 2011

See all articles by Thomas Randolph Beard

Thomas Randolph Beard

Auburn University - Department of Economics

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Richard Saba

Auburn University - Department of Economics

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Date Written: May 16, 2011

Abstract

In this paper, we offer a hybrid approach to merger simulation in which we allow rather extensive pre-testing to suggest the "correct", or most desirable, form for the underlying demand curves. Our application is the merger between the large mobile telephone companies Cingular and AT&T Wireless merger in 2004. While a somewhat novel approach, our findings are not radical in any way, so the econometric determination of demand forms does not appear to produce novel conclusion per se. That said, allowing the data to inform the researcher about the appropriate form of demand seems a worthwhile effort for merger simulations, data permitting.

Keywords: Merger Simulation, Demand Models, Telecommunications

JEL Classification: D40, L10, L66

Suggested Citation

Beard, Thomas Randolph and Ford, George S. and Saba, Richard, An Econometric-Driven Merger Simulation: Considerations and Application (May 16, 2011). International Journal of the Economics of Business, Forthcoming. Available at SSRN: https://ssrn.com/abstract=925968

Thomas Randolph Beard

Auburn University - Department of Economics ( email )

415 W. Magnolia
Auburn, AL 36849-5242
United States

George S. Ford (Contact Author)

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States

Richard Saba

Auburn University - Department of Economics ( email )

415 W. Magnolia
Auburn, AL 36849-5242
United States

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