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An Econometric-Driven Merger Simulation: Considerations and Application

Author

Listed:
  • T. Randolph Beard
  • George Ford
  • Richard Saba

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 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.

Suggested Citation

  • T. Randolph Beard & George Ford & Richard Saba, 2006. "An Econometric-Driven Merger Simulation: Considerations and Application," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(2), pages 217-228.
    • Handle: RePEc:taf:ijecbs:v:13:y:2006:i:2:p:217-228
    DOI: 10.1080/13571510600784466
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    References listed on IDEAS

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    1. Frederick Warren-Boulton & Serdar Dalkir, 2001. "Staples and Office Depot: An Event-Probability Case Study," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 19(4), pages 467-479, December.
    2. James G. MacKinnon, 2002. "Bootstrap inference in econometrics," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 35(4), pages 615-645, November.
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