Price Discrimination and Bargaining: Empirical Evidence from Medical Devices
53 Pages Posted: 7 Dec 2010 Last revised: 25 Feb 2015
Date Written: February 10, 2012
Many important issues in business-to-business markets involve price discrimination and negotiated prices, situations where theoretical predictions are ambiguous. This paper uses new panel data on buyer-supplier transfers and a structural model to empirically analyze bargaining and price discrimination in a medical device market. While many phenomena that restrict different prices to different buyers are suggested as ways to decrease hospital costs (e.g., mergers, group purchasing organizations, and transparency), I find that: (1) more uniform pricing works against hospitals by softening competition; and (2) results depend ultimately on a previously unexplored bargaining effect.
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