A Simple Vertical Differentiation Model for Simulating Product Introduction and Preliminary Merger Screening
نویسنده
چکیده
The purpose of this model is to examine how the entry of a new product of intermediate quality affects the pricing of existing products, and how it this is changed by alternative ownership patterns. We show how the model’s predictions are consistent with some apparently puzzling consistencies in unregulated pharmaceuticals pricing. We also demonstrate how the model can be calibrated for a quick first filter on the expected consequences of a merger (with or without remedies) between two firms with overlapping product ranges. Version dated: 19 March 2004
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