In this expository article we describe the proportional calibration technique to simulate the potential impact of an association (merger) in a differentiated product price competitive industry. The procedure is forward-looking and implementable with minimal data and computational requirement. We describe the procedure in detail with examples and perform a sensitivity analysis of the predictions with respect to the input parameters.
Epstein, Roy and David Rubinfeld (2002), ‘Merger Simulation: A Simplified Approach with New Applications’, Antitrust Law Journal, 69: 883–919.
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Werden, Gregory (1997), ‘Simulating the Effects of Differentiated Products Mergers: A Practical Alternative to Structural Merger Policy’, George Mason Law Review, 5: 363–86.
