Hovhannisyan, Vardges

September, 2022

An Empirical Evaluation of Tobacco Addiction in the United States

By: Hovhannisyan, Vardges ; Bastian, Chris ; Devadoss, Stephen
This study adopts a novel approach to assessing addiction to cigarettes, small and large cigars, e-cigarettes, smokeless tobacco, and loose smoking tobacco by decomposing tobacco demand into supernumerary and precommitted quantities. Supernumerary tobacco consumption represents a demand component that varies with prices and smoker income, while precommitted consumption is immune to changes in economic circumstances and thus may be reflective of addiction. By empirically estimating the supernumerary and precommitted demand components, we shed light on the severity of tobacco addiction and smoker price and income responsiveness in the United States, which may prove vital in refining various tobacco control policies.
Download Full Article

January, 2019

Addressing Pre-Commitment Bias with a Generalized EASI Model: An Application to Food Demand in Russia

By: Hovhannisyan, Vardges; Shanoyan, Aleksan
The Exact Affine Stone Index (EASI) demand model offers distinct advantages over its predecessors. However, it does not account for pre-committed demand. This can bias elasticity estimates when such pre-commitments are present. We derive a generalized EASI model that allows for pre-committed demand. We illustrate the advantage of this model in an empirical analysis of food demand in Russia using provincial-level panel data. The results provide strong empirical evidence for the presence of pre-committed demand for key food commodities. The findings extend the literature on food demand in Russia by estimating elasticities that account for pre-commitments and unobserved regional heterogeneity.
Download Full Article

August, 2014

On the Endogeneity of Retail Markups in an Equilibrium Analysis: A Control-Function Approach

By: Hovhannisyan, Vardges; Stiegert, Kyle; Bozic, Marin
The endogeneity of retail markups arises due to the correlation between the markups and unobserved costs in the retail pricing equation. This correlations may be a result unobserved product quality affecting both price and markups. Despite inconsistency resulting from markup endogeneity, it has long been ignored in the equilibrium analysis of retail behavior. We account for retail markup endogeneity using a control-function approach in which controls are derived from empirical evidence in the marketing literature. Furthermore, we adopt three test procedures to evaluate this endogeneity and apply our method in an econometric analysis of retail market behavior in the marketing of yogurt in the United States. The results provide strong statistical evidence for the fact that markup endogeneity has been overlooked, resulting in upward bias in retail markups.
Download Full Article

August, 2013

A Benefit-Function Approach to Studying Market Power: An Application to the U.S. Yogurt Market

By: Hovhannisyan, Vardges; Bozic, Marin
This article provides a structural framework for studying the market performance of various food industries. It revisits the benefit-function approach to modeling demand and extends its application to the empirical industrial-organization literature. We illustrate the empirical value of our model in an econometric analysis of competitive conditions in the retail market for branded yogurt. The results show that retailers are engaged in imperfect competition. Furthermore, national brand yogurt remains an important tool for retail profitability.
Download Full Article