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Bundling Among Rivals: A Case of Pharmaceutical Cocktails / Claudio Lucarelli, Sean Nicholson, Minjae Song.
- Format:
- Book
- Author/Creator:
- Lucarelli, Claudio.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w16321.
- NBER working paper series no. w16321
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Other Title:
- Bundling Among Rivals
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2010.
- Summary:
- 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.
- Notes:
- Print version record
- August 2010.
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