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Merger simulation in second-score auctions: A nested logit model

Author

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  • De Stefano, Martino
  • Moresi, Serge

Abstract

We consider merger simulation based on the second-score auction (SSA) model and the “flat logit” assumption, and extend it to a more general “nested logit” assumption. We apply our framework to the 2012 acquisition of PowerReviews by Bazaarvoice and show that using flat logit instead of nested logit can potentially bias the predicted price effect from the merger substantially.

Suggested Citation

  • De Stefano, Martino & Moresi, Serge, 2024. "Merger simulation in second-score auctions: A nested logit model," Economics Letters, Elsevier, vol. 241(C).
    • Handle: RePEc:eee:ecolet:v:241:y:2024:i:c:s0165176524002714
    DOI: 10.1016/j.econlet.2024.111787
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    More about this item

    Keywords

    Mergers; Second-score auctions; Nested logit; Simulations;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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