CV-methods: Methods For Calculating Compensating Variation (CV)

Description Methods

Description

Calculate the amount of money a consumer would need to be paid to be just as well off as they were before the merger.

Methods

signature(object = c(Logit,LogitNests))

All the information needed to compute CV is already available within the Logit and Nested Logit classes.

signature(object = c(CES, CESNests), revenueInside)

The CV method for the “CES” and nested “CES” classes has an additional parameter, ‘revenueInside’, which must be set equal to the total amount that consumers have spent on products inside the market in order for CV to be calculated.

signature(object = AIDS , totalRevenue)

The CV method for “AIDS” has an additional parameter, ‘totalRevenue’, which should aggregate income (e.g. GDP). If supplied computes CV in terms of dollars. If missing, CV is calculated as a percentage change in aggregate in income. must be set equal to the vector of pre-merger prices for all products in the market in order for CV to be calculated.

signature(object = c(Linear,LogLin))

Although no additional information is needed to calculate CV for either the “Linear” or “LogLin” classes, The CV method will fail if the appropriate restrictions on the demand parameters have not been imposed.



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