bargain_calibrate: Nash bargaining calibration

In mergersim: Merger Simulation and Calibration

Nash bargaining calibration

Description

Nash bargaining calibration

Usage

bargain_calibrate(
  param,
  own,
  price,
  shares,
  cost,
  weight = NA,
  lambda,
  includeMUI = TRUE
)

Arguments

param	Price coefficient alpha and mean values delta, parameters to calibrate
own	Ownership matrix
price	Price
shares	Observed market shares
cost	Marginal costs for each product
weight	Weighting vector of length 2*J
lambda	Bargaining power of the buyer
includeMUI	logical; whether to include marginal utility of income in buyer's payoff, thereby translating dollars to utility. Default is True, interpreted as buyer maximizing utility. Setting equal to False would have interpretation that buyer maximizes profts.

Details

This function calculate the first-order conditions from a Bertrand price-setting model of competition

Value

The first-order conditions

Examples

alpha  <- -0.9
delta <- c(.81,.93,.82)
c_j <- c(.05,.31,.30)
own_pre = diag(3)
p0 <- c_j*1.1
share1 <- (exp(delta + alpha*p0))/(1+sum(exp(delta + alpha*p0)))
wt_vector <- c(1,1,1,1000,1000,1000)

bargain_calibrate(param = c(alpha,delta),own = own_pre,price = p0,
shares = share1,cost = c_j, weight = wt_vector,
lambda = 0.5)

mergersim documentation built on July 21, 2026, 5:09 p.m.