# 经济代写|产业经济学代写Industrial Economics代考|ECON7400

## 经济代写|产业经济学代写Industrial Economics代考|Pricing

There are $F$ multi-product firms operating in $M$ national markets. In each market $m$ a firm $f$ sells a subset, $F_{f m}$ of the $J_m$ car models sold in the market $m$. The sales of a typical car $j$ in market $m, q_{j m}\left(p_m\right)$ are a function of the consumer price vector in market $m, p_m=\left(p_{1 m}, \ldots, p_{j_m m}\right)$ and not of the price vectors in the other markets. ${ }^{11}$ This is based on the assumption of prohibitive arbitrage costs to consumers. Prices are in a common currency, e.g., the ECU. Because a single cross section (for the year 1990) is used, it is not possible to take into account exchange rate fluctuations over time and their possible incomplete pass-through to consumers, as in, e.g., Knetter (1993). The total cost of producing a typical car $j, C_j=\left(q_{j 1}\left(p_1\right), \ldots, q_{j m}\left(p_m\right)\right)$, is a function of the sales of $\operatorname{car} j$ in the $M$ markets. Firm $f$ ‘s profit is
$$\Pi_f=\sum_{m=1}^M \sum_{j \in F_{j m}} p_{j m}^w q_{j m}\left(p_m\right)-\sum_{j \in F_{f m}} C_j\left(q_{j 1}\left(p_1\right), \ldots, q_{j M}\left(p_M\right)\right)$$
where $p_{j m}^w$ is the wholesale price of a car $j$ in market $m$ received by the firm. The firm’s wholesale price, $p_{j m}^w$, may differ from the consumer price, $p_{j m}$, because of value-added taxes imposed by the governments or because of dealer markups. The specific relation-ship between $p_{j m}^w$ and $p_{j m}$ is modelled as an exogenous relationship. The possible strategic interdependence between firms, dealers, and governments is thus ignored, conforming to most previous empirical studies. ${ }^{12}$ The focus is instead on the interdependence among firms themselves.

Firms set the prices of their differentiated products to maximize profit. The assumption of price-setting behaviour in the car market is common and consistent with industry wisdom, see, e.g., the discussion of pricing practices by the UK Monopolies and Mergers Commission Report (1992). ${ }^{13}$ Some firms are not subject to an import quota while other firms are. A firm that is not subject to an import quota simply chooses a wholesale price, $p_{j m}^w$, for every car it markets to maximize its profit, given the prices set by its competitors. A firm that is subject to an import quota solves a constrained profit-maximization problem. In some markets (e.g., in Italy) the constraint specifies that the firm’s demand cannot exceed a certain absolute level $D_{f m}$, i.e., $D_{f m} \geq \sum_{j \in F_{f m}} q_{j m}\left(p_m\right)$. In other markets (e.g., in France, Germany and the United Kingdom) the constraint specifies that the firm’s demand cannot exceed a certain percentage of total market demand $d_{f m}$, i.e., $d_{f m} \geq \sum_{i \in F_{f m}} q_{j m}\left(p_m\right) / \sum_{j=1}^{J_m} q_{j m}\left(p_m\right)$

## 经济代写|产业经济学代写Industrial Economics代考|Functional forms

I discuss the functional form of both components of the pricing equation, marginal cost and markup, in turn. An introductory remark applies. I restrict most parameters to be the same across markets, except for the ‘fixed effects’ that allow the constants to vary across markets. These cross-market restrictions make it possible to pool the data, and they facilitate the estimation.
The functional form of the marginal cost in equation (4) is
$$\frac{\partial C_j}{\partial q_{j m}}=\exp \left(w_{j m} \gamma_w+\gamma_q \ln Q_j+\omega_m+\omega_{j m}\right)$$
where $w_{j m}$ is a vector of physical characteristics of car $j$ in market $m$. The variable $Q_j=\sum_{m+1}^M q_{j m}$ the total (world) sales of a car $j$ in all $M$ markets, indicates whether marginal costs are increasing, constant, or decreasing in outputs. ${ }^{15}$ The error term, $\omega_{j m}$ has the economic interpretation of capturing unobserved (to the econometrician) car characteristics that influence the marginal cost of car $j$ in market $m$. Similarly, the fixed effect $\omega_m$ captures unobserved characteristics that systematically influence the marginal cost of all cars operating in market $m$. This may follow from, for example, unobserved national differences in cost-increasing regulations, such as the required use of catalytic converters in Germany. Note that when markups approach zero due to perfect competition, and when $\gamma_q=0$, the pricing equation reduces to the simple hedonic specification (1).

The specific relationship between the firm’s wholesale price, $p_{j m}^w$ and the consumer (list) price, $p_{j m}$, takes the following functional form:
$$p_{j m}^w=p_{j m} /\left[\left(1+t_m\right)\left(1+\tau_m\right)\right]$$
i.e., the firm’s wholesale price, $p_{j m}^w$ is a fraction of the consumer (list) price, $p_{j m}$. The variable $t_m$ captures the observable percentage deviations of $p_{j m}^w$ from $p_{j m}$, such as value-added taxes. ${ }^{16}$ The variable $\tau_m$ is a fixed effect capturing the unobservable (to the econometrician), market-average percentage deviations of $p_{j m}^w$ from $p_{j m}$, in particular dealer markups. ${ }^{17}$ The interpretation of $\tau_m$ as unobserved market-specific dealer markups will of ten be used below. It is consistent with a standard practice by the car manufacturers in the EC. Indeed, as discussed in Monopolies and Mergers Commission (1992), the dealer markups are usually calculated as a percentage on the pretax consumer list price $p_{j m} /\left(1+t_m\right)$.

## 经济代写|产业经济学代写工业经济代考|定价

.定价 .经济代写|

$$\Pi_f=\sum_{m=1}^M \sum_{j \in F_{j m}} p_{j m}^w q_{j m}\left(p_m\right)-\sum_{j \in F_{f m}} C_j\left(q_{j 1}\left(p_1\right), \ldots, q_{j M}\left(p_M\right)\right)$$
，其中$p_{j m}^w$是该公司在$m$市场上收到的汽车$j$的批发价。由于政府征收的增值税或经销商加价，该公司的批发价格$p_{j m}^w$可能与消费者价格$p_{j m}$不同。$p_{j m}^w$和$p_{j m}$之间的特定关系被建模为外生关系。因此，公司、交易商和政府之间可能的战略相互依赖被忽略了，这与以往的大多数实证研究一致。${ }^{12}$相反，重点是企业之间的相互依赖

## 经济代写|产业经济学代写工业经济学代考|功能形式

.

$$\frac{\partial C_j}{\partial q_{j m}}=\exp \left(w_{j m} \gamma_w+\gamma_q \ln Q_j+\omega_m+\omega_{j m}\right)$$
，其中$w_{j m}$是市场$m$中汽车$j$的物理特性向量。变量$Q_j=\sum_{m+1}^M q_{j m}$表示一辆车在所有$M$市场$j$的总(世界)销量，表示边际成本在产出中是增加、不变还是减少。${ }^{15}$误差项，$\omega_{j m}$有捕捉未观察到的(对计量经济学家)汽车特征的经济学解释，影响汽车$j$在市场$m$的边际成本。同样，固定效应$\omega_m$捕捉了未观察到的特征，这些特征系统地影响了$m$市场上所有汽车的边际成本。这可能是由于，例如，在增加费用的条例方面未被观察到的国家差异，例如德国要求使用催化转换器。请注意，当由于完全竞争而加成接近零时，当$\gamma_q=0$时，定价方程简化为简单的享乐规范(1)。

$$p_{j m}^w=p_{j m} /\left[\left(1+t_m\right)\left(1+\tau_m\right)\right]$$

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