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- Title
Mergers with interfirm bundling: a case of pharmaceutical cocktails.
- Authors
Song, Minjae; Nicholson, Sean; Lucarelli, Claudio
- Abstract
Pharmaceutical cocktails often consist of two or more drugs produced by competing firms. The component drugs are often also sold as stand-alone products. We analyze the effects of a merger between two pharmaceutical firms selling complements for colorectal cancer treatment. In this setting there are two merger effects: the standard upward pricing pressure due to firms internalizing the substitution between the stand-alone products, and an additional effect where the firms internalize the impact of selling complements and reduce the price of the cocktail product. The net impact of a merger is a modest price increase, or even a price decrease.
- Subjects
PHARMACEUTICAL industry mergers; PRICE increases; COLON cancer treatment; DRUG prices; PRICE cutting
- Publication
RAND Journal of Economics (Wiley-Blackwell), 2017, Vol 48, Issue 3, p810
- ISSN
0741-6261
- Publication type
Article
- DOI
10.1111/1756-2171.12192