AIDS-class: Class “AIDS”

Description

The “AIDS” class contains all the information needed to calibrate a AIDS demand system and perform a merger analysis under the assumption that firms are playing a differentiated products Bertrand pricing game.

Objects from the Class

Objects can be created by using the constructor function aids.

Slots

Let k denote the number of products produced by all firms.

mktElast:

A negative number equal to the industry pre-merger price elasticity.

priceStart:

A length k vector who elements equal to an initial guess of the proportional change in prices caused by the merger.

priceDelta:

A length k vector containing the simulated price effects from the merger.

Extends

Class Linear, directly. Class Bertrand, by class “Linear”, distance 2.

Methods

For all of methods containing the ‘preMerger’ argument, ‘preMerger’ takes on a value of TRUE or FALSE, where TRUE invokes the method using the pre-merger ownership structure, while FALSE invokes the method using the post-merger ownership structure.

calcMargins

signature(object , preMerger=TRUE)

Calculates pre-merger or post-merger equilibrium margins.

calcPriceDelta

signature(object,isMax=FALSE,...)

Computes the proportional change in each products' price from the merger under the assumptions that consumer demand is AIDS and firms play a differentiated product Bertrand Nash pricing game.When isMax equals TRUE, a check is run to determine if the calculated equilibrium price vector locally maximizes profits. ‘...’ may be used to change the default values of BBsolve, the non-linear equation solver.

calcPrices

signature(object, preMerger = TRUE)

Compute either pre-merger or post-merger equilibrium prices under the assumptions that consumer demand is AIDS and firms play a differentiated product Bertrand Nash pricing game. return a vector of length-k vector of NAs if user did not supply prices.

calcPriceDeltaHypoMon

signature(object,prodIndex,...)

Calculates the price changes that a Hypothetical Monopolist would impose on its products relative to pre-merger prices.

calcShares

signature(object, preMerger = TRUE)

Computes either pre-merger or post-merger equilibrium quantity shares under the assumptions that consumer demand is AIDS and firms play a differentiated product Bertrand Nash pricing game.

calcSlopes

signature(object)

Uncover AIDS demand parameters. Assumes that firms are currently at equilibrium in a differentiated product Bertrand Nash pricing game.

cmcr

signature(object)

Calculates compensated marginal cost reduction, the percentage decrease in the marginal costs of the merging parties' products needed to offset a post-merger price increase.

CV

signature(object)

Calculate the amount of money a representative consumer would need to be paid to be just as well off as they were before the merger. Requires a length-k vector of pre-merger prices.

diversion

signature(object, preMerger= TRUE)

Computes a k x k matrix of diversion ratios.

elast

signature(object , preMerger = TRUE)

Computes a k x k matrix of own and cross-price elasticities.

show

signature(object)

Displays the percentage change in prices due to the merger.

summary

signature(object,revenue=TRUE,parameters=FALSE,digits=2,..)

Summarizes the effect of the merger, including price and revenue changes. Setting ‘revenue’ equal to FALSE reports quantity rather than revenue changes. Setting ‘parameters’ equal to TRUE reports all demand parameters. ‘digits’ controls the number of significant digits reported in output.

Author(s)

Charles Taragin charles.taragin@usdoj.gov

Examples

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showClass("AIDS")           # get a detailed description of the class
showMethods(classes="AIDS") # show all methods defined for the class

Questions? Problems? Suggestions? or email at ian@mutexlabs.com.

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