Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56037
Authors: 
Graf, Julia
Year of Publication: 
2012
Series/Report no.: 
DICE discussion paper 45
Abstract: 
Group Purchasing Organizations (GPOs) increasingly gain in importance with respect to the supply of pharmaceutical products and frequently use multiple or exclusive rebate contracts to exercise market power. Based on a Hotelling model of horizontal and vertical product differentiation, we examine the controversy whether there exists a superior rebate scheme as far as consumer surplus, firms profits and total welfare are concerned. Accounting for horizontal and vertical differentiation, we find that firms clearly prefer multiple over exclusive rebate contracts. Contrary, there exists no rebate form that per se lowers total costs for the members of the GPOs or maximizes total welfare.
Subjects: 
GPOs
Rebate Contracts
Vertical Differentiation
JEL: 
I11
L13
L42
ISBN: 
978-3-86304-044-4
Document Type: 
Working Paper

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