Computer codes for "The Political Economy of Entry Barriers"



by Toshihiko Mukoyama and Latchezar Popov



There are four matlab files (two main files and two accompanying files) required to 
compute the equilibrium of the dynamic model. By running main.m with different parameter 
values (specified in the main text) and then running simulation.m (with an appropriate initial value) we can generate the results shown in Figures 2 to 7.



Files


main.m - main program

simulation.m - a program that computes the path of policies, mass of leaders and revenue
flow for the government

linp.m - linear interpolation function


extif.m - a function that compares payoffs of the two coalitions and the government





The following is a list of the parameters that can be adjusted (in the parameter
 section of main.m)




lambdae - the probability that a follower will enter if a = e


lambdab - the probability that a follower will enter if a = b


deltab - the probability that a leader will exit if a = b


deltae - the probability that a leader will exit if a = e



pile - Payoff of a leader if a = e


pilb - Payoff of a leader if a = b


pife - Payoff of a follower if a = e


pifb - Payoff of a follower if a = b



beta - Firms' discount factor


betag - Policymaker's discount factor





Outputs of main.m:


The state space is discretized to the set Lgrid


All the following are arrays and correspond to the relevant value on Lgrid:


a - policy rule - 1 for a = b, 2 for  a = e


G - value function for the government


vl - per member value of the leader coalition


vf - per member value of the follower coalition


RLF - total payment by the leader coalition


RFF - total payment by the follower coalition


S - total surplus



Inputs of simulation.m

T - periods

L0 - initial mass of incumbents


Outputs of simulation.m

Lt - time path of L

at - time path of policy regime

Rt - policymaker flow revenue