A Fixed-Point Approach to Equilibrium Pricing in Differentiated Product Markets.

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dc.contributor.author Morrow, William Ross en_US
dc.date.accessioned 2009-02-05T19:34:38Z
dc.date.available NO_RESTRICTION en_US
dc.date.available 2009-02-05T19:34:38Z
dc.date.issued 2008 en_US
dc.date.submitted en_US
dc.identifier.uri http://hdl.handle.net/2027.42/61742
dc.description.abstract The use of passenger cars in the U.S. is widely recognized as a primary source of greenhouse gas emissions. Among other concerns related to transportation energy usage, these emissions have motivated policy makers to reform regulatory policies that impact the design and pricing behavior of automotive firms. However many prominent analyses supporting these reforms neglect aspects of imperfect competition that many economists have come to recognize in the automotive industry, particularly Bertrand competition. Understanding the impacts of alternative regulatory policies accounting for imperfectly competitive behavior may improve policy makers' decisions regarding regulatory policy, as well as firms' abilities to profitably respond to the policies chosen. Examining and exploiting this potential first requires further development of the theory of Bertrand competition. This dissertation makes three contributions the application of Bertrand competition in regulated differentiated product markets. We focus on the classes of Logit and Mixed Logit Discrete Choice Random Utility Models of consumer demand and avoid assumptions on the number or type of products offered by different firms. Our first contribution is a proof of the existence of unregulated equilibrium prices for Logit models using a new fixed-point equation equivalent to the first-order necessary condition for equilibrium, minimal assumptions on the utility specification, and mathematical tools from differential topology. This fixed-point equation is then generalized to the class of Mixed Logit models, one of the most flexible and popular empirical forms for representing consumer demand, under a weak hypothesis on the utility specification and mixing distribution. Several numerical approaches based on fixed-point characterizations of stationarity are demonstrated to be efficient and reliable methods for the computation of unregulated equilibrium prices in large-scale and complex differentiated product markets. Finally, we further extend this fixed-point approach to regulated equilibrium pricing problems with regulatory policy forms inspired by those considered for the U.S. automotive industry. Modified fixed-point iterations are derived for a number of regulatory policies with differentiable regulatory costs. A hybrid fixed-point approach is developed for the computation of regulated equilibrium prices under standard-based policies with non-differentiable regulatory costs, such as the Corporate Average Fuel Economy standards currently active in the U.S. en_US
dc.format.extent 1493932 bytes
dc.format.extent 1373 bytes
dc.format.mimetype application/octet-stream
dc.format.mimetype text/plain
dc.language.iso en_US en_US
dc.subject Bertrand Competition en_US
dc.subject Differentiated Product Markets en_US
dc.subject Mixed Logit en_US
dc.subject Poincare-Hopf Theorem en_US
dc.subject GMRES-Newton Hookstep en_US
dc.title A Fixed-Point Approach to Equilibrium Pricing in Differentiated Product Markets. en_US
dc.type Thesis en_US
dc.description.thesisdegreename Ph.D. en_US
dc.description.thesisdegreediscipline Mechanical Engineering en_US
dc.description.thesisdegreegrantor University of Michigan, Horace H. Rackham School of Graduate Studies en_US
dc.contributor.committeemember Skerlos, Steven J. en_US
dc.contributor.committeemember Feinberg, Fred M. en_US
dc.contributor.committeemember Papalambros, Panos Y. en_US
dc.contributor.committeemember Viswanath, Divakar en_US
dc.subject.hlbsecondlevel Economics en_US
dc.subject.hlbtoplevel Business en_US
dc.subject.hlbtoplevel Engineering en_US
dc.description.bitstreamurl http://deepblue.lib.umich.edu/bitstream/2027.42/61742/1/morroww_1.pdf
dc.owningcollname Dissertations and Theses (Ph.D. and Master's)
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