Price Discrimination and Bargaining: Empirical Evidence from Medical Devices

Grennan, Matthew

doi:10.2139/ssrn.1721145

Cited by 87 publications

(168 citation statements)

References 28 publications

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“…Hence, both manufacturers and providers likely lost surplus. This is consistent with previous research on vertical relationships suggesting that large firms on each side of the market share the surplus (Crawford and Yurukoglu, 2012;Grennan, 2013;Ho and Lee, 2015). Through this channel, the decreased reimbursements to providers would reduced the prices manufacturer's receive as well.…”

Section: Surplus For Providers and Manufacturerssupporting

confidence: 90%

The Role of Government Reimbursement in Drug Shortages

Yürükoğlu

Liebman²,

Ridley³

2012

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Section: Surplus For Providers and Manufacturerssupporting

confidence: 90%

The Role of Government Reimbursement in Drug Shortages

Yürükoğlu

Liebman²,

Ridley³

2012

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“…The central role of the MCO 6 Crawford and Yurukoglu (2012) estimate bargaining between content providers and cable companies to study the impact of a la carte pricing of channels. Grennan (2013) studies negotiated prices set between hospitals and suppliers of medical devices. In the marketing literature, Draganska and Villas-Boas (2011) and Meza and Sudhir (2010) estimate the relative bargaining power of manufacturers and retailers in the markets for coffee and breakfast cereals, respectively.…”

Section: Modelmentioning

confidence: 99%

“…Our econometric approach is differentiated from these papers in that our unobserved term reflects cost variation -which is closer to standard pricing models -instead of variation in Nash bargaining weights as in Grennan (2013), and by our assumptions on the pass-through from negotiated prices to out-of-pocket prices.…”

mentioning

confidence: 99%

Mergers When Prices Are Negotiated: Evidence from the Hospital Industry

Gowrisankaran

Nevo

Town

2015

American Economic Review

286

140

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In healthcare and other bilateral oligopoly markets, prices are often negotiated by the contracting parties. Many hospitals have merged in recent years in part to gain bargaining leverage with managed care organizations (MCOs), leading to several antitrust trials. We specify and estimate a bargaining model of competition between hospitals and MCOs using claims and discharge data from Northern Virginia. We find that MCO bargaining restrains hospital prices significantly relative to standard insurance. Increasing patient coinsurance tenfold would reduce prices by 16%. A proposed hospital acquisition that was challenged by the Federal Trade Commission would have significantly raised hospital prices.The views expressed here are the authors alone and do not necessarily reflect the views of the Federal Trade Commission or any Commissioner.

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“…Rennhoff and Serfes (2008) study a similar setting, though we could not retrieve the type of reaction they employ for disagreements. 4 Grennan (2013) estimates a Nash bargaining model between hospitals and medical equipment suppliers. 5 What is important in these works is that, typically, they first retrieve market parameters and then perform counterfactuals based on a particular assumption about what rivals do in a disagreement.…”

Section: Related Literature and Contributionmentioning

confidence: 99%

Vertical Bargaining and Countervailing Power

Iozzi

Valletti

2014

American Economic Journal: Microeconomics

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We study a set of bilateral Nash bargaining problems between an upstream input supplier and several differentiated but competing retailers. If The question of how input prices (including wages) are set is subtle. In most retail markets, consumers are atomistic and, thus, reasonably modeled as price takers when patronizing a particular seller. It is less clear who sets the input price in vertically-related markets. In particular, in "tight" oligopolies with a few upstream and a few downstream firms, a framework of bilateral negotiations, with individually-negotiated input prices, seems appropriate. 1 An extensive theoretical literature, both in Industrial Organization and in Labor Economics, has employed Nash axiomatic bargaining to model this setting. IO empirical work often uses structural models that are based on Nash bargaining. It is well known that, in a Nash bargain, the outside option impacts the bargained outcome. The same outside option, however, can be modeled in different ways, depending on the remaining players' behavior in the event of a disagreement. The purpose of this work is to study how the model of the outside option affects the outcome of the negotiation.We make a general methodological point that applies to Nash bargaining in vertically-related markets with downstream competition, when one firm is engaged in multiple negotiations. The simplest setting would involve one upstream firm and two downstream competitors. Indeed, this is the setting analyzed by the seminal work of Horn and Wolinsky (1988, henceforth HW).

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Price Discrimination and Bargaining: Empirical Evidence from Medical Devices

Cited by 87 publications

References 28 publications

The Role of Government Reimbursement in Drug Shortages

The Role of Government Reimbursement in Drug Shortages

Mergers When Prices Are Negotiated: Evidence from the Hospital Industry

Vertical Bargaining and Countervailing Power

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