The U.S. Department of Justice seal, The United States Department of Justice
Search Antitrust
 

Abstract

Using Cost Pass-Through to Calibrate Demand

Nathan H. Miller, Marc Remer and Gloria Sheu, EAG 12-9, October 2012
PDF   Accessible Text

Abstract:
We demonstrate that cost pass-through can be used to inform demand calibration, potentially eliminating the need for data on margins, diversion, or both. We derive the relationship between cost pass-through and consumer demand using a general oligopoly model of Nash-Bertrand competition and develop speci c results for four demand systems: linear demand, logit demand, the Almost Ideal Demand System (AIDS), and log-linear demand. The methods we propose may be useful to researchers and antitrust authorities when reliable measures of margins or diversion are unavailable.

Get Antitrust Division Updates

Sign up for E-Mail Updates

Subscribe to News Feeds

To view PDF files on this website you need the free Adobe Reader.