Understanding firm responsesJune 04, 2019
Daniel Chaves is joining the Department of Economics as an Assistant Professor.
Chaves completed his PhD at the University of Wisconsin – Madison, and researches industrial organization and applied microeconomics.
Chaves applies microeconomic models to the decisions and behaviour of firms to examine how they interact and compete. Specifically, Chaves studies how firms determine strategic responses to regulations, and how these responses affect market and policy outcomes.
In a recent study, Chaves examined how automakers in Brazil responded to government levies on engine size, with different taxes applied based on a range of engine size brackets. The levies were introduced to improve fuel efficiency, and to act as a luxury tax. Chaves found the levies were effective as luxury taxes, with the government collecting more money from more expensive vehicles.
The tax policies were, however, ineffective as a method of improving fuel efficiency. Using models based on all possibly available engine sizes, Chaves found that automakers offered the largest possible engine size within each threshold, removing smaller engine options from the market. In turn, consumers did not have as wide a selection for fuel-efficient vehicles.
Chaves is interested in other work related to the Brazilian auto industry, including how Brazilian car sellers use the availability of safety features in cars as a method to price discriminate consumers, and how the price of cars in Brazil changed in response to the government introducing policies to reduce international competition.
Chaves feels his work will fit in well with the work of the Department of Economics at Western.
“Western will be a great place to be. It’s one of the best departments in Canada and it is also a very collegial department.” said Chaves. “It will be a nice place to learn more and I am looking forward to start working with my colleagues.”