Introduction
Ching-to Albert Ma and Thomas G. McGuire
Exclusionary Equilibria in Health-Care Markets
Esther Gal-Or
We have demonstrated that when providers of health insurance are perceived to be differentiated by consumers, circumstances may arise under which they find it advantageous to restrict the set of health-care providers that they approve to their customers. Even if all health-care providers are equally qualified and efficient, payers may choose to contract with a selected subset of them in order to secure more favorable contract terms.
We have demonstrated that when providers of health insurance are perceived to be differentiated by consumers, circumstances may arise under which they find it advantageous to restrict the set of health-care providers that they approve to their customers. Even if all health-care providers are equally qualified and efficient, payers may choose to contract with a selected subset of them in order to secure more favorable contract terms.
Dynamic Equilibrium in the Hospital Industry
Gautam Gowrisankaran and Robert J. Town
We present a dynamic model of the hospital industry in which nonprofit and for-profit hospitals coexist and compete and are differentiated by their objective functions, investment technologies, and taxation rates. In our model, patients differ by income and type of insurance coverage, and choose admission to their preferred hospital, while hospitals choose investment, entry, exit, and pricing strategies.
We present a dynamic model of the hospital industry in which nonprofit and for-profit hospitals coexist and compete and are differentiated by their objective functions, investment technologies, and taxation rates. In our model, patients differ by income and type of insurance coverage, and choose admission to their preferred hospital, while hospitals choose investment, entry, exit, and pricing strategies.
Generic Entry and the Pricing of Pharmaceuticals
Richard G. Frank and David S. Salkever
During the 1980s the share of prescriptions sold by retail pharmacies that was accounted for by generic products roughly doubled. The price response to generic entry of brand-name products has been a source of controversy. In this paper we estimate models of price responses to generic entry in the market for brand-name and generic drugs. We study a sample of 32 drugs that lost patent protection during the early to mid-1980s.
During the 1980s the share of prescriptions sold by retail pharmacies that was accounted for by generic products roughly doubled. The price response to generic entry of brand-name products has been a source of controversy. In this paper we estimate models of price responses to generic entry in the market for brand-name and generic drugs. We study a sample of 32 drugs that lost patent protection during the early to mid-1980s.
Hospital Reimbursement Incentives: An Empirical Analysis
Mark McClellan
Reimbursement systems for health-care providers are very complex, like the production systems that they regulate. This complexity has led to some important misperceptions about the incentive consequences of major reimbursement reforms. One example is the prospective payment system (PPS), developed to provide “high-powered” incentives through fixed prices for hospital admissions for the US elderly.
Reimbursement systems for health-care providers are very complex, like the production systems that they regulate. This complexity has led to some important misperceptions about the incentive consequences of major reimbursement reforms. One example is the prospective payment system (PPS), developed to provide “high-powered” incentives through fixed prices for hospital admissions for the US elderly.
Competition Among Health Maintenance Organizations
William E. Encinosa III and David E. M. Sappington
We develop a model of competition among health maintenance organizations (HMOs) to analyze the effects of market power, scale economies, and asymmetric knowledge of health risk on market outcomes. We find that competition among HMOs may, but need not, ensure socially preferred outcomes.
We develop a model of competition among health maintenance organizations (HMOs) to analyze the effects of market power, scale economies, and asymmetric knowledge of health risk on market outcomes. We find that competition among HMOs may, but need not, ensure socially preferred outcomes.
The Interaction between a Most-Favored-Customer Clause and Price Dispersion: An Empirical Examination of the Medicaid Rebate Rules of 1990
Fiona M. Scott Morton
This paper examines the effect of the MFC rules adopted by Medicaid on both price dispersion and price levels in the wholesale pharmaceutical market. Theory suggests that the regulations should reduce price dispersion and increase the average price for those products with a high initial level of price dispersion. Using data which can only measure some dimensions of price discrimination, I find that discrimination falls for products sold to hospitals, but not drugstores.
This paper examines the effect of the MFC rules adopted by Medicaid on both price dispersion and price levels in the wholesale pharmaceutical market. Theory suggests that the regulations should reduce price dispersion and increase the average price for those products with a high initial level of price dispersion. Using data which can only measure some dimensions of price discrimination, I find that discrimination falls for products sold to hospitals, but not drugstores.
Buyer Alliances and Managed Competition
Yeon-Koo Che and Ian Gale
In a health insurance market, a large employer or an organized “buyer alliance” is in a position to influence the design of plans offered to its members. We study how the sponsors of buyer alliances manage competition among insurance firms by focusing on their choices of the format of competition, the number of firms allowed to compete, and the quality of care offered by the firms.
In a health insurance market, a large employer or an organized “buyer alliance” is in a position to influence the design of plans offered to its members. We study how the sponsors of buyer alliances manage competition among insurance firms by focusing on their choices of the format of competition, the number of firms allowed to compete, and the quality of care offered by the firms.
Multiprincipal Agency Relationships as Implied by Product Market Competition
Esther Gal-Or
This paper surveys recent work in contract theory that relates to the allocation of tasks among agents within an organization as well as to the effect of product market competition upon optimal contracting and agency costs.
This paper surveys recent work in contract theory that relates to the allocation of tasks among agents within an organization as well as to the effect of product market competition upon optimal contracting and agency costs.
Contract Complexity, Incentives, and the Value of Delegation
Nahum Melumad, Dilip Mookherjee and Stefan Reichelstein
In settings where the revelation principle applies, delegation arrangements are frequently inferior to centralized decision making, and at best achieve the same level of performance. This paper studies the value of delegation when organizations are constrained by a bound on the number of contingencies in any contract.
In settings where the revelation principle applies, delegation arrangements are frequently inferior to centralized decision making, and at best achieve the same level of performance. This paper studies the value of delegation when organizations are constrained by a bound on the number of contingencies in any contract.
Integrated Strategy and International Trade Disputes: The Kodak-Fujifilm Case
David P. Baron
This paper examines the integration of market and nonmarket strategies in a setting involving market competition and international trade policy where governments serve as bargaining agents for firms. In the case modeled, the Eastman Kodak Company (Kodak) filed a Section 301 petition under US trade law against practices of Fuji Photo Film Company (Fujifilm) in the Japanese distribution system that Kodak alleges constitute trade barriers.
This paper examines the integration of market and nonmarket strategies in a setting involving market competition and international trade policy where governments serve as bargaining agents for firms. In the case modeled, the Eastman Kodak Company (Kodak) filed a Section 301 petition under US trade law against practices of Fuji Photo Film Company (Fujifilm) in the Japanese distribution system that Kodak alleges constitute trade barriers.
Capacity Commitment Versus Flexibility
Marcel Boyer and Michel Moreaux
We show how technological flexibility choices and equilibrium configurations (both simultaneous and sequential duopoly) depend on six industry characteristics. Low market volatility combined with intermediate market size favors inflexible technologies; large values of either volatility or size favor flexible technologies; low or intermediate values of both favor the coexistence of flexible and inflexible technologies.
We show how technological flexibility choices and equilibrium configurations (both simultaneous and sequential duopoly) depend on six industry characteristics. Low market volatility combined with intermediate market size favors inflexible technologies; large values of either volatility or size favor flexible technologies; low or intermediate values of both favor the coexistence of flexible and inflexible technologies.
Firm Characteristics and the Speed of FDA Approval
Mary K. Olson
This paper empirically examines the effect of firm-specific characteristics on the length of time required by the Food and Drug Administration (FDA) to review and approve new-drug applications between 1990 and 1992. The approach treats regulatory decisions as endogenous and explains the variation in regulatory behavior as a function of differences that exist between firms and drugs.
This paper empirically examines the effect of firm-specific characteristics on the length of time required by the Food and Drug Administration (FDA) to review and approve new-drug applications between 1990 and 1992. The approach treats regulatory decisions as endogenous and explains the variation in regulatory behavior as a function of differences that exist between firms and drugs.
Division of Labor in Teams
Y. Joseph Lin
This paper examines the incentive effects of division of labor on worker effort, in the absence of the scale effects studied by Adam Smith. The game-theoretic model gives two results. (1) Suppose workers are identical and risk-neutral, and there is stochastic observation of group output by the firm offering compensations subject to some worker-participation constraint. Then the firm can arrive at the same first-best outcome with or without division of labor.
This paper examines the incentive effects of division of labor on worker effort, in the absence of the scale effects studied by Adam Smith. The game-theoretic model gives two results. (1) Suppose workers are identical and risk-neutral, and there is stochastic observation of group output by the firm offering compensations subject to some worker-participation constraint. Then the firm can arrive at the same first-best outcome with or without division of labor.
The Regulation of Predatory Firms
Antoine Faure-Grimaud
This article investigates the issue of predation by a regulated firm. Since it has private information, a regulated firm obtains higher rents in case of successful predation: the fewer the competitors, the higher the marginal social value of the regulated firm's effort and the higher the informational rents.
This article investigates the issue of predation by a regulated firm. Since it has private information, a regulated firm obtains higher rents in case of successful predation: the fewer the competitors, the higher the marginal social value of the regulated firm's effort and the higher the informational rents.
Address
Harvard Business School
Soldiers Field Road
Boston, MA 02163
617-496-8392
Published with
