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Price Discrimination in the Italian Medical Device Industry: An Empirical Analysis

Alberto Cavaliere (), Giovanni Crea () and Angelo Cozzi
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Giovanni Crea: Department of Economics and Management, University of Pavia
Angelo Cozzi: Department of Economics and Management, University of Pavia

No 146, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: In this paper we carry out an empirical analysis to show that the significant price dispersion in the Italian market for medical devices may also be due to price discrimination strategies. We find that ASL (Aziende Sanitarie Locali) incur higher costs than AO (Aziende Ospedaliere) that purchase larger quantities. Centralized purchasing agencies pay lower prices than single purchasers. Therefore second-degree price discrimination seems to be one cause of price differences. Product age has a negative effect on prices due to the impact of innovation on suppliers’ costs. Concerning geographical price discrimination, public procurers located in the south pay significantly higher prices than those located in Northern or Central Italy. However we show that this result may be due to the higher probability that southern public procurers purchase from independent retailers rather than from producers of medical devices, implying a potential double marginalization effect due to the market power of retailers at a local level.

Keywords: Price Dispersion; Bayesian Networks; Double Marginalization. (search for similar items in EconPapers)
JEL-codes: I11 H51 L11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-eur, nep-hea and nep-ind
Date: 2018-01
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Journal Article: Price discrimination in the Italian medical device industry: an empirical analysis (2019) Downloads
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