Product differentiation and welfare in a mixed duopoly with regulated prices: the case of a public and a private hospital

Hospital markets are often characterised by price regulation and the existence of different ownership types. Using a Hotelling framework, this paper analyses the effect of different objectives of the hospitals on quality, profits, and overall welfare in a price regulated duopoly with symmetric locations. In contrast to other studies on mixed oligopolies, this paper shows that in a duopoly with regulated prices privatisation of the public hospital may increase overall welfare depending on the difference of the hospitals' marginal costs and the weight of the additional public hospital's motive. --mixed oligopoly,price regulation,quality,hospital competition

Rationalisierung und Wettbewerb im Arzneimittelmarkt

Rationalisierungsmaßnahmen sind bei steigenden Ausgaben in einem vor allem durch Umlagen finanzierten Gesundheitssystem wichtige Mittel zur Erreichung einer effizienten Produktion und Allokation der Ressourcen. In diesem Artikel werden verschiedene deutsche Regulierungsansätze zur Stärkung des Wettbewerbs und der Effizienz im Arzneimittelmarkt beschrieben und ökonomisch bewertet. Zwei Schwerpunkte der Analyse liegen auf dem Preiswettbewerb im Festbetragsmarkt durch Zuzahlungsbefreiungsgrenzen (sukzessive seit 2006) sowie auf der neuen Erstattungsregulierung des Arzneimittel-Neuordnungsgesetzes (AMNOG, seit 2011) für neue, patentierte Arzneimittel

Does Higher Cost Inefficiency Imply Higher Profit Inefficiency? - Evidence on Inefficiency and Ownership of German Hospitals

This paper investigates cost and profit efficiency of German hospitals. More specifically, it deals with the question how hospital efficiency varies with ownership, patient structure and other exogenous factors, which are neither inputs nor outputs of the production process. We conduct a Stochastic Frontier Analysis (SFA) on a multifaceted administrative German dataset combined with the balance sheets of 374 hospitals for the years 2002 to 2005.The results indicate that private (for-profit) and (private) non-profit hospitals are on average less cost efficient but more profit efficient than publicly owned hospitals.Hospital efficiency, ownership, stochastic frontier analysis, profit function

In vino veritas: Theory and evidence on social drinking

It is a persistent phenomenon in many societies that a large proportion of alcohol consumption takes place in company of other people. While the phenomenon of social or public drinking is well discussed in disciplines as social psychology and anthropology, economists have paid little attention to the social environment of alcohol consumption. This paper tries to close this gap and explains social drinking as a trust facilitating device. Since alcohol consumption tends to make some people (unwillingly) tell the truth, social drinking can eventually serve as a signaling device in social contact games. Empirical support is obtained from a cross-country analysis of trust and a newly developed index of moderate alcohol consumption. --social and public drinking,alcohol consumption,social contact games,trust,signaling

Pharmaceutical prices under regulation: Tiered co-payments and reference pricing in Germany

Many countries with national health care providers and health insurances regulate the market for pharmaceuticals to steer drug demand and to control expenses. For example, they introduce reference pricing or tiered co-payments to enhance drug substitution and competition. Since 2006, Germany follows an innovative approach by differentiating drug co-payments by the drug's price relative to its reference price. In this two-tier system, prescription drugs are completely exempted from co-payments if their prices undercut a certain price level relative to the reference price. We identify the effect of the policy on the prices of all affected prescription drugs and differentiate the analysis by firm types (innovative, generic, branded generic or importing firms). To identify a causal effect, we use a differences-in-differences approach and additionally exploit the fact that the exemption policy had been introduced successively in the different clusters. We use quarterly data from 2007 to 2010 and find empirical evidence for differentiated price setting strategies by firm types, ranging from price decreases of -13.1% (branded generics firms) to increases of +2.0% (innovators) following the introduction of potential reductions in co-payments. We refer to the latter result as the co-payment exemption paradox. Our competition proxy (no. of firms) suggests a significant but small negative correlation with prices

Stabilität und Wandel von Arbeitsmarktinstitutionen aus wettbewerbsökonomischer Sicht

Dieser Beitrag fasst die Ergebnisse unserer industrieökonomischen, theoretischen Forschung zur Fragestellung von Stabilität und Wandel von Arbeitsmarktinstitutionen zusammen. Wir verfolgen dabei einen wettbewerbsökonomischen Forschungsansatz, der Marktmacht sowohl auf Arbeits- als auch auf Absatzmärkten unterstellt. In der Literatur hat sich hierfür der Begriff unionised oligopolies eingebürgert. Damit wird zum Ausdruck gebracht, dass die untersuchte Klasse von Modellen einerseits Verhandlungsmacht auf Arbeitsmärkten und andererseits unvollständigen Wettbewerb und somit Marktmacht auf Absatzmärkten berücksichtigt. Kern ist die Analyse der Wechselwirkungen zwischen Organisationsformen auf Arbeitsmärkten und Wettbewerbsverhältnissen auf Produktmärkten. Dabei analysieren wir aktuelle Entwicklungen auf dem deutschen Arbeitsmarkt wie die Einführung sektorspezifischer Mindestlöhne, die Rolle von Spartengewerkschaften, Formen der Gewinnbeteiligung von Arbeitnehmern sowie internationale Wettbewerbsaspekte wie die Verlagerung der Produktion durch internationale Unternehmen ins Ausland. -- This contribution gives an overview of the main results of our theoretical research on the stability and change of labour market institutions. We use so-called models of unionised oligopolies which are borrowed from the theory of industrial organization in order to analyse the effects of simultaneous market power in both labour and product markets. The focus of our research is on the interaction between various organisational structures of labour markets and different forms of product market competition. In particular, we analyse some current developments in Germany, such as the introduction of sector-specific minimum wages, the formation of craft unions, the increasing number of profit sharing contracts as well as the relocation of production facilities to foreign countries in the context of globalisation.

How much priority bonus should be given to registered organ donors? An experimental analysis

Recent laboratory experiments have demonstrated that prioritizing registered donors on the waiting list impressively increases the willingness to register as an organ donor. In these experiments, registered organ recipients are prioritized regardless of howlong they have been on thewaiting list. In the field, however, the willingness to register is only one factor affecting the waiting list. In this paper, we provide a comparative-statics analysis of the priority treatment by varying the number of bonus periods a registered person can skip on thewaiting list. We want to assess how much of a priority bonus registered persons should obtain in order for registration rates to improve. Our results indicate that a higher number of bonus periods significantly improves registration rates whereas a small bonus of only one period is of minor significance. A bonus of three periods ofwaiting time has the same effect as absolutely prioritizing registered recipients

How Much Priority Bonus Should be Given to Registered Organ Donors? An Experimental Analysis

Experiments show that prioritizing registered donors on the waiting list impressively increases the willingness to register as an organ donor. We are the first to provide a comparative-statics analysis of the priority treatment by varying the number of bonus periods a registered person can skip on the waiting list. Our results indicate that a higher number of bonus periods significantly improves registration rates whereas a small bonus of only one period is of minor significance

The welfare impact of parallel imports: A structural approach applied to the German market for oral anti-diabetics

We investigate the welfare impact of parallel imports using a large panel data set containing monthly information on sales, ex-factory prices, and further product characteristics for all 700 anti-diabetic drugs sold in Germany between 2004 and 2010. We estimate a two-stage nested logit model of demand and, based on an oligopolistic model of multi- product firms, we then recover the marginal costs and markups. We finally evaluate the effect of the parallel imports' policy by calculating a counter-factual scenario without parallel trade. According to our estimates, parallel imports reduce the prices for patented drugs by 11% and do not have a significant effect on prices for generic drugs. This amounts to an increase in the demand-side surplus by e19 million per year (or e130 million in total) which is relatively small compared to the average annual market size of around e227 million based on ex-factory prices. The variable profits for the manufacturers of original drugs from the German market are reduced by e18 million (or 37%) per year when parallel trade is allowed, yet only one third of this difference is appropriated by the importers

The welfare impact of parallel imports: A structural approach applied to the German market for oral antidiabetics

We investigate the welfare impact of parallel imports using a large panel data set containing monthly information on sales, ex-factory prices, and further product characteristics for all 700 antidiabetic drugs sold in Germany between 2004 and 2010. We estimate a two-stage nested logit model of demand and, based on an oligopolistic model of multi-product firms, we then recover the marginal costs and mark-ups. We finally evaluate the effect of the parallel imports' policy by calculating a counter-factual scenario without parallel trade. According to our estimates, parallel imports reduce the prices for patented and generic drugs by 39% and 0.05%, respectively. This amounts to an increase in the demand-side surplus by 11.4 million per year which is relatively small compared to the market size of around 470million. Manufacturers of original drugs, instead, lose more than half of their variable profits when parallel trade is allowed and only a small fraction of these rents are appropriated by the parallel importers