This paper describes three prototypical systems of therapeutic reference pricing (RP) for pharmaceuticals -Germany, the Netherlands, and New Zealand -and examines their effects on the availability of new drugs; manufacturer prices, reimbursement levels, and out-of-pocket surcharges to patients; and market shares of originator and generic products. The results differ across countries in predicta...

This paper examines whether it makes sense to consider Sutton’s “bounds” approach as a candidate theory for explaining the recent evolution of market structure in the biotechnology sector, and to speculate whether market structure will change if the industry begins to introduce second-generation GM products that are of more direct benefit to consumers. A key result is that the market structure ...

A durable-good monopolist sells its branded product over two periods. In period 2, when there is entry of a counterfeiter, the branded firm may charge a high price to signal its quality. Counterfeit competition thus enables the branded firm to commit to a high price in period 2, alleviating the classic time-inconsistency problem under a durable-good monopoly. This can increase the branded firm’...

In media markets, the value of advertisement exposure depends on circulation, and media consumers’ valuation is affected by advertising. This paper analyzes media market competition in a duopoly framework. There exist symmetric and asymmetric equilibria in terms of firm size. There is less scope for asymmetry when products are more differentiated or of higher intrinsic quality. Some media exhib...

Recent work in the real options approach to investment has argued that firms face significant opportunity costs when entry costs are largely irreversible, and these costs equal the value of an option to defer investment. This study seeks to examine empirically these claims by investigating the interactive effects of uncertainty and irreversibility on the likelihood of entry into new business by...

A free entry model with linear costs is considered where firms first choose their entry time and then compete in the market according to the resulting timing decisions. Multiple equilibria arise allowing for infinitely many industry output configurations encompassing one limit-output dominant firm and the Cournot equilibrium with free entry as extreme cases. Sequential entry is never observed. ...

We use data from eBay to identify hundreds of thousands of instances in which retailers posted otherwise identical product listings with targeted variation in pricing and auction design. We use these matched listings to measure the dispersion in auction prices for identical goods sold by the same seller, to estimate nonparametric auction demand curves, to analyze the effect of buy it now option...

Empirical research has shown tremendous productivity di erences, even within narrowly de ned industries. A great host of studies is explainsing this productivity disparity by factors such as idiosyncratic technology shocks, input price di erences, management skills, or international trade. Although these explanations are undoubtedly important, the current paper suggests that product diversi cat...

I consider an oligopoly model where, prior to price competition, firms invest in persuasive advertising and induce brand loyalty in consumers who would otherwise buy the cheapest alternative on the market. This setting, in which persuasive advertising is introduced to homogenous product markets, provides an alternative explanation for price dispersion phenomena. Despite ex-ante symmetry, the eq...

The authors examine industry concentration for the U.S. food manufacturing sector. This study is the first to examine whether particular subsectors within the food manufacturing industry, which operate in the presence of industry-funded check-off programs such as marketing orders, are more or less concentrated than industries without such research and marketing programs. The authors find eviden...