Software

Apt demand toolkit to accompany “Pass-through as an Economic Tool,” created by Yali Miao

This toolkit has two main functions.

The first function is the calibration or estimation of Apt demand function and the associated consumer surplus.  This outputs either a graph of the relevant quantities or provides a manipulable function, which a user can then perform arbitrary computational transformations on, including graphs with respect to various parameters or other computations. This routine requires either calibration or estimation: for calibration either the user must input apt demand parameters or local properties of demand (level, elasticity, pass-through and its slope) at a particular reference price or must input local observation of exogenous cost shocks, potentially endogenous prices and resulting quantities.
The second function is to take an Apt demand function and allow the comparison of equilibrium outcomes (mark-ups, prices and quantities) within and across industrial organizations and firms in the Generalized Cournot-Stackelberg model.  This allows either vertical monopolies (in the case of Apt demand) or quantity competition (Apt inverse demand) with arbitrary numbers of firms setting prices or quantities in arbitrary sequence.

The toolkit comes in two formats:

·       Version 0.1 lite  designed for the casual user

·       Version 0.1 full  designed for the serious user, interested in adding functionality

The toolkit is still preliminary and incomplete.  Suggestions, comments and criticism are all welcome by email to me or Yali Miao.  The primary upgrade we are working on is a more sophisticated estimation algorithm that would allow estimation based on third-order quantity-price data, without requiring price-cost data, would use GMM in a more sophisticated way to over-identify the model by cross-equation restrictions and would all standard errors on all quantities to be computed.

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