ajaz_eco_204_2012_2013_chapter_16_Market_Power

Eco 204 s ajaz hussain do not distribute clearly these

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Unformatted text preview: power is affected by “random” factors in which case the “regression” power cost model is: () ( ): is it linear, quadratic, cubic, etc.? To estimate the As yet, we do not know the functional form of parameters of this model (note that the intercept is in fact the fixed cost of power) we will first have to guess the ( ). The simplest way to do this by inspecting a scatterplot of power expenses against functional form of “quantity”: 16 ECO 204 Chapter 16: Analysis of Firms with Market Power (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. Clearly, these 3 data points are best described by a “linear” function so that the regression power cost model becomes: ( Note that this regression model is of the form: the parameters , by collecting data on parameter and ): Multiple Summary ) and we can use Excel’s regression feature to estimate , and regressing on a constant and (note that the Adjusted StErr of R-Square R-Square R Estimate 8.424360856 0.9986 0.9972 0.9943 Degrees of Sum of Mean of ANOVA Table Freedom Squares Squares...
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