{"title":"Pricing above value: Selling to a market with selection problems","authors":"Jan Boone","doi":"10.1016/j.jhealeco.2024.102868","DOIUrl":null,"url":null,"abstract":"<div><p>This paper shows that selection incentives in downstream markets distort upstream prices. It is possible for inputs to be priced above the value that the good has for final consumers. We apply this idea to pharmaceutical companies selling drugs to a health insurance market with selection problems. We specify the conditions under which drugs are sold at prices exceeding treatment value. Another feature of the model is an excessive private incentive to reduce market size, e.g. in the form of personalized medicine.</p></div>","PeriodicalId":50186,"journal":{"name":"Journal of Health Economics","volume":null,"pages":null},"PeriodicalIF":3.4000,"publicationDate":"2024-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0167629624000134/pdfft?md5=3b0eb6b82621a6630d212e193c7dc27a&pid=1-s2.0-S0167629624000134-main.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Health Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0167629624000134","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
This paper shows that selection incentives in downstream markets distort upstream prices. It is possible for inputs to be priced above the value that the good has for final consumers. We apply this idea to pharmaceutical companies selling drugs to a health insurance market with selection problems. We specify the conditions under which drugs are sold at prices exceeding treatment value. Another feature of the model is an excessive private incentive to reduce market size, e.g. in the form of personalized medicine.
期刊介绍：
This journal seeks articles related to the economics of health and medical care. Its scope will include the following topics:
Production and supply of health services;
Demand and utilization of health services;
Financing of health services;
Determinants of health, including investments in health and risky health behaviors;
Economic consequences of ill-health;
Behavioral models of demanders, suppliers and other health care agencies;
Evaluation of policy interventions that yield economic insights;
Efficiency and distributional aspects of health policy;
and such other topics as the Editors may deem appropriate.
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