Abstract
We uses ADHD drugs sales data from 2000-2003 and compare estimates of elasticities and merger simulations from three different demand models. Models include logit, random coefficients logit, and conditional AIDS demand model with multistage budgeting. The magnitude of cross-price elasticities is large in the third model in comparison to the first two, and some of the cross-price elasticities are estimated to be negative. Consequently, hypothetical merger simulations show large price effects for the multistage AIDS model, both for the merging firms as well as for the competitors, in comparison to the other two discrete choice models.
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