View source: R/auction2nd_tariff.R
auction2nd_tariff | R Documentation |
Simulate the effect of tariffs when firms play a second score procurement auction game and consumer demand is Logit.
auction2nd_tariff( demand = c("logit"), prices, quantities, margins, owner = NULL, mktElast = NA_real_, diversions, tariffPre = rep(0, length(quantities)), tariffPost = rep(0, length(quantities)), priceStart, parmStart, control.slopes, control.equ, labels = paste("Prod", 1:length(quantities), sep = ""), ... )
demand |
A character vector indicating which demand system to use. Currently allows logit (default). |
prices |
A length k vector product prices. |
quantities |
A length k vector of product quantities. |
margins |
A length k vector of product margins. All margins must be in levels (not w.r.t to price), or NA. |
owner |
EITHER a vector of length k whose values indicate which firm produced a product before the tariff OR a k x k matrix of pre-merger ownership shares. |
mktElast |
A negative number equal to the industry pre-merger price elasticity. Default is NA . |
diversions |
A k x k matrix of diversion ratios with diagonal elements equal to -1. Default is missing, in which case diversion according to revenue share is assumed. |
tariffPre |
A vector of length k where each element equals the current ad valorem tariff (expressed as a proportion of the consumer price) imposed on each product. Default is 0, which assumes no tariff. |
tariffPost |
A vector of length k where each element equals the new ad valorem tariff (expressed as a proportion of the consumer price) imposed on each product. Default is 0, which assumes no tariff. |
priceStart |
For aids, a vector of length k who elements equal to an initial guess of the proportional change in price caused by the merger. The default is to draw k random elements from a [0,1] uniform distribution. For ces and logit, the default is prices. |
parmStart |
|
control.slopes |
A list of |
control.equ |
A list of |
labels |
A k-length vector of labels. |
... |
Additional options to feed to the |
Let k denote the number of products produced by all firms.
Using price, and quantity, information for all products
in each market, as well as margin information for at least
one products in each market, auction2ndtariff
is able to
recover the slopes and intercepts of a Logit, CES, demand
system. These parameters are then used to simulate the price
effects of an ad valorem tariff under the assumption that the firms are playing a
2nd score auction.
auction2ndtariff
returns an instance of class Tariff2ndLogit
Simon P. Anderson, Andre de Palma, Brent Kreider, Tax incidence in differentiated product oligopoly, Journal of Public Economics, Volume 81, Issue 2, 2001, Pages 173-192.
bertrand_tariff
to simulate the effects of a tariff under a Bertrand pricing game and monopolistic_competition_tariff
to simulate the effects of a tariff under monopolistic competition.
## Calibration and simulation results from a 10% tariff on non-US beers "OTHER-LITE" ## and "OTHER-REG" ## Source: Epstein/Rubenfeld 2004, pg 80 prodNames <- c("BUD","OLD STYLE","MILLER","MILLER-LITE","OTHER-LITE","OTHER-REG") owner <-c("BUD","OLD STYLE","MILLER","MILLER","OTHER-LITE","OTHER-REG") price <- c(.0441,.0328,.0409,.0396,.0387,.0497) quantities <- c(.066,.172,.253,.187,.099,.223)*100 margins <- c(.3830,.5515,.5421,.5557,.4453,.3769) # margins in terms of price margins <- margins*price # dollar margins tariff <- c(0,0,0,0,.1,.1) names(price) <- names(quantities) <- names(margins) <- prodNames result.2nd <- auction2nd_tariff(demand = "logit",prices=price,quantities=quantities, margins = margins,owner=owner, tariffPost = tariff, labels=prodNames) print(result.2nd) # return predicted price change summary(result.2nd) # summarize merger simulation
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