01 · STRUCTURE
How is the market built?
Define markets, measure concentration, assess entry.
Identify the relevant market with SSNIP-based tests and cross-price elasticity. Quantify market power with HHI, Lerner Index, and markup estimation. Detect barriers to entry and track firm entry and exit rates.
SUMMARY
Unconcentrated, competitive market
HHI 1451 · 8 entities · top entity 23% share
Entities
8
HHI
1451
CR4
64%
Top entity
Cola_A
Concentration · Revenue share
Cross-price elasticity (top 5)
| Q↓ / P→ | ColaA | ColaB | ColaC | JuiceA | LemonA |
|---|---|---|---|---|---|
| ColaA | -2.21 | -0.73 | -0.76 | -1.32 | -1.66 |
| ColaB | -2.00 | -1.08 | -1.30 | -1.52 | -1.58 |
| ColaC | -1.67 | -0.80 | -1.64 | -1.68 | -3.41 |
| JuiceA | -0.05 | -1.19 | -2.38 | -1.91 | -1.27 |
| LemonA | -0.87 | -0.78 | -1.19 | -0.87 | -1.00 |
02 · CONDUCT
How do firms behave?
Detect collusion, dominance abuse, and vertical restraints.
Screen for price parallelism and bid-rigging patterns. Quantify abuse of dominance with predatory pricing and price discrimination tests. Assess vertical integration and foreclosure risk.
SUMMARY
Substantial pricing power detected
Mean Lerner 41.0% but only 67% of firms align with demand-implied benchmark
MEAN LERNER
41.0%
22 firms
DEMAND-IMPLIED
44.5%
1/|elasticity|
AGREEMENT RATE
67%
|est−theo| <10pp
CONDUCT THETA
1.02
0=Bertrand,1=Monopoly
Estimated vs demand-implied Lerner
03 · M&A
Will this merger harm competition?
Screen, simulate, and measure merger effects.
Apply ΔHHI, UPP, and diversion ratio tests to screen merger risk. Simulate post-merger prices with Logit-Bertrand. Measure stock market and price effects with event studies and difference-in-differences.
Scale Economies
η = 1.20 > 1: cost rises slower than output. Larger firms have a cost advantage.
• α_Q = 0.834 (SE 0.013)
• η = 1/α_Q = 1.199 → IRS
• MES ≈ Q = 335 (AC = 2.18)
• R² = 0.944
α_Q
0.834
SE 0.013
η=1/α_Q
1.199
IRS
MES (Q)
335
AC = 2.18
AC_max/AC_min
1.49
cost dispersion
Average Cost Curve (Mean AC by Q-bin)
04 · POLICY
Did the policy work?
Causal identification — DID, RDD, IV, event study.
Estimate causal effects of regulations, subsidies, and trade policy using difference-in-differences, regression discontinuity, and instrumental variables. Measure tax pass-through and price regulation impact.
Difference-in-Differences
ATT
+12.1
p-value
0.003
05 · IMPACT
What are the economic effects?
Productivity, dynamics, linkages, and welfare.
Measure total factor productivity with Levinsohn-Petrin. Estimate scale economies and X-inefficiency with DEA. Track firm survival and reallocation. Quantify output and employment multipliers and welfare effects.
Median survival
4.9
periods
S(5) / S(10)
48.7%
/ 28.0%
Exits / Censored
357
/ 43 censored
Size HR
0.62
significant
Kaplan-Meier Survival Curve
By group; log-rank χ² = 63.57, p ≈ .000
Hazard Rate
Period-by-period exit risk. Constant ⇒ exponential survival; rising ⇒ aging effect.
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