Price discrimination and bargaining power in the U.S. vaccine market: Implications for childhood immunization policy |
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Institution: | 1. Department of Library & Information Science, Pondicherry University, Kalapet, Puducherry 605014, India;2. Department of Library & Information Science, North Eastern Hill University, Shillong, Meghalaya 793022, India |
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Abstract: | The U.S. vaccine market exhibits a pricing structure in which the major purchaser of vaccines, the public sector, receives substantial discounts. This outcome is consistent with three theories of market behavior: third-degree price discrimination; bargaining power; and cost differences. The true nature of this pricing structure has important efficiency and policy implications. This paper uses a longitudinal data set of private catalog and federal contract prices to empirically determine whether price discrimination or bargaining power is being practiced in this market. I find that, while it is not possible to eliminate other factors, the results favor the bargaining power hypothesis. |
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