A simulation program for Mergers in Cournot Markets
This Python program simulates a merger of 2 firms in an imperfectly competitive industry. It generates predicted effects of a merger/acquisition by leveraging the following assumptions:
a. Cournot competition between user-defined firms
b. Linear demand, potentially in multiple geographic markets
c. quadratic costs
(Note: The program also currently assumes that production is at a single facility and that firms compete over one specific product market. Functionality for jointly-defined geographic and product markets, as well as support for multiple production facilities will be added in a future update.)
Each merger simulation requires the following inputs:
- Matrix of production quantities/capacities at the firm level
- Market demand elasticity
- Pre-merger price
- Any merger-specific marginal cost efficiency
CournotMerge.py - Contains the classes and functions required to run the merger simulation
Classes:
CournotMerge - These are merger objects that describe a specific merger scenario
Functions:
__init__(self, F={}, markets=[], e=[], p=[], MF = [0,1], E=0)
returns: None
Initializes the CournotMerge object and runs the simulation program
describe(self)
returns: string
Describes the merger the object analyzes
summarize(self)
returns: None
Summarizes the merger by displaying a host of useful information and analysis
production(self)
returns: string
Displays the post-merger production and percent change by market
prices(self)
returns: string
Displays the post-merger prices and percent change by market
concentration(self)
returns: string
Displays the post-merger HHI and delta by market
profits(self)
returns: string
Displays the post-merger profits and percent change by firm
demand(self)
returns: string
Displays the inverse demand functions for each market
harm(self)
returns: string
Displays the estimated harm to consumer surplus as a result of the merger by market
firm - These are firm objects that are passed into a CournotMerge object
Functions:
__init__(self, name="", q=[0], markets=[""])
returns: None
Initializes the cfirm object
describe(self)
returns: string
Describes production for the firm by market
merge(self, partner)
returns: firm object
Creates a new firm by merging self with partner (combines names and sums production quantities by market)
sample.py - Contains an imaginary merger of avocado retailers that compete in 3 geographic markets. Demonstrates how a user-made script can use the CournotMerge program
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