Location of Repository

COUNTERVAILING POWER IN WHOLESALE PHARMACEUTICALS -super-*

By SARA FISHER ELLISON and CHRISTOPHER M. SNYDER

Abstract

Using data on wholesale prices for antibiotics sold to U.S. drugstores, we test the growing theoretical literature on 'countervailing power' (a term for the ability of large buyers to extract discounts from suppliers). Large drugstores receive a modest discount for antibiotics produced by competing suppliers but no discount for antibiotics produced by monopolists. These findings support theories suggesting that supplier competition is a prerequisite for countervailing power. As further evidence for the importance of supplier competition, we find that hospitals receive substantial discounts relative to drugstores, attributed to hospitals' greater ability to induce supplier competition through restrictive formularies. Copyright 2010 The Authors. Journal compilation 2010 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.

DOI identifier: 10.1111/j.1467-6451.2010.00408.x
OAI identifier:
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://www.blackwell-synergy.c... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.