Nber Working Paper Series Bundling among Rivals: a Case of Pharmaceutical Cocktails
نویسندگان
چکیده
We empirically analyze the welfare effects of cross-firm bundling in the pharmaceutical industry. Physicians often treat patients with "cocktail" regimens that combine two or more drugs. Firms cannot price discriminate because each drug is produced by a different firm and a physician creates the bundle in her office from the component drugs. We show that a less competitive equilibrium arises with cocktail products because firms can internalize partially the externality their pricing decisions impose on competitors. The incremental profits from creating a bundle are sometimes as large as the incremental profits from a merger of the same two firms. Claudio Lucarelli Assistant Professor Department of Policy Analysis and Management Cornell University MVR Hall Ithaca, NY 14853-4401 [email protected] Sean Nicholson Associate Professor Department of Policy Analysis and Management Cornell University 123 Martha Van Rensselaer Hall Ithaca, NY 14853 and NBER [email protected] Minjae Song Assistant Professor Simon Graduate School of Business University of Rochester Rochester, NY 14627-0100 [email protected]
منابع مشابه
Bundling Among Rivals: A Case of Pharmaceutical Cocktails
In this paper we empirically analyze the welfare effects of cross-firm bundling in the pharmaceutical industry. Physicians often treat patients with "cocktail" regimens that combine two or more drugs. Firms cannot price discriminate because each drug is produced by a different firm and the physician creates the bundle in his offi ce from the component drugs. We show that a less competitive equi...
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