EconPapers    
Economics at your fingertips  
 

Bundling Among Rivals: A Case of Pharmaceutical Cocktails

Claudio Lucarelli, Sean Nicholson and Minjae Song ()

No 16321, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: I11 L1 L11 (search for similar items in EconPapers)
Date: 2010-08
New Economics Papers: this item is included in nep-bec, nep-com and nep-hea
Note: EH IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
http://www.nber.org/papers/w16321.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:16321

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w16321

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2023-06-30
Handle: RePEc:nbr:nberwo:16321