Price structure in two-sided markets: Evidence from the magazine industry

Kaiser, Ulrich; Wright, Julian

doi:10.1016/j.ijindorg.2005.06.002

Cited by 298 publications

(202 citation statements)

References 26 publications

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“…First, we assume that (unobserved) cost factors are common across products in their own (sub-) market and that other (demand-side) shocks specific to the (sub-) market are not correlated with these factors, an approach adopted by Kaiser and Wright (2006) similar to that used by Hausman and Taylor (1981), Hausman et al (1994) as well Berry et al (1995). This implies that prices of other products of the same producer are assumed to be driven by common underlying cost factors associated with a producer's production and distribution.…”

Section: Identificationmentioning

confidence: 99%

Regulation of pharmaceutical prices: Evidence from a reference price reform in Denmark

Kaiser

Méndez

Rønde

et al. 2014

Journal of Health Economics

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp10062.pdf Executive summaryThis paper studies the effects of a reference price reform in Denmark on price and demand for statins, products that reduce the blood cholesterol levels. Too high cholesterol levels may cause cardiovascular diseases. Reference pricing is a cost containment tool that is applied to reduce health expenditures in 19 European countries as well as Australia, British Columbia and New Zealand.Our paper is the first to combine price data and demand data to study reform effects. We produce estimates for changes in total government (health care) expenditures, patient expenditures, patient welfare and producer revenues.A main finding is that government and patients did indeed benefit in terms of price declines and declining total expenditures from the reform while producers incurred losses.There are, however, striking differences between products that were "cheap" before the reform and those that were "expensive" before the change. The benefits to patients and the government were primarily due to the initially expensive products. The reform effects were hence quite asymmetrically distributed across products (and thus patients).We also show that an empirical analysis of the reform effects that studies price changes only may lead to quite misleading implications for welfare analysis. On April 1, 2005, Denmark changed the way references prices, a main determinant of reimbursements for pharmaceutical purchases, are calculated. The previous reference prices, which were based on average EU prices, were substituted to minimum domestic prices. Novel to the literature, we estimate the joint effects of this reform on prices and quantities. Prices decreased more than 26 percent due to the reform, which reduced patient and government expenditures by 3.0 percent and 5.6 percent, respectively, and producer revenues by 5.0 percent. The prices of expensive products decreased more than their cheaper counterparts, resulting in large differences in patient benefits from the reform. Das Wichtigste in Kürze JEL-classification: I18, C23

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Section: Identificationmentioning

confidence: 99%

Regulation of pharmaceutical prices: Evidence from a reference price reform in Denmark

Kaiser

Méndez

Rønde

et al. 2014

Journal of Health Economics

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“…There is an emphasis on the externalities of the usage of the service in the membership model and it assumes linear (per-transaction) costs and pricing (Armstrong, 2006a;Armstrong & Wright, 2007). Research content is another important component of two-sided models, such as multi-homing or partial multi-homing (e.g., Roson, 2005;Gabszewicz & Wauthy, 2004;Doganoglu & Wright, 2006), ownership (e.g., Hagiu & Lee, 2011;Nocke & Peitz, 2007;Rochet & Tirole, 2003), profit or non-profit platform (e.g., Rochet & Tirole, 2003), open and closed platform (e.g., Economides & Katsamakas, 2006;Schiff, 2003), third-part content (Hagiu & Spulber, 2012), dynastic competition (Chen & Tse, 2007;Sun & Tse, 2007;Eriksson et al, 2008) and empirical work (e.g., Kaiser & Wright, 2005;Rysman, 2004).…”

Section: Two-sided Marketmentioning

confidence: 99%

Price discrimination in two-sided markets

Liu¹,

Serfes²

2016

SAJEMS

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The use of a price discrimination strategy is an important tool in competition. It can hurt firms and benefit consumers in a one-sided market. However, in two-sided markets, its primary goal is to attract more agents or increase profits. Here, the performance of a second-degree price discrimination strategy in the context of duopoly two-sided platforms is analysed. Two exogenous variables, which include the discount rate and the price discrimination threshold, are used in order to examine whether the price discrimination strategy could help two-sided platforms achieve their objective, which is to maximise their market value. Three cases are considered, and we demonstrate that the price discrimination strategy cannot attract more agents and at the same time increase the profits; a lower price discrimination threshold cannot ensure larger markets shares; a higher discount rate is detrimental to the profit of a platform. However, this is good for its market shares. Moreover, discriminative pricing increases the competition.

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“…16 This result is used in Affeldt et al (2013) to derive formulas for Upward Pricing Pressure in a twosided market. An equivalent condition for two-sided markets is assumed to hold in Kaiser and Wright (2006) who bring the Hotelling model of Armstrong (2006) to the data.…”

Section: One-sided Versus Two-sided Monopoly Pricingmentioning

confidence: 99%

“…Readers of magazines seem instead to attach a positive value to advertising (which is avoidable and more targeted). See Kaiser and Wright (2006) and Kaiser and Song (2009). 5 See strategies.…”

Section: Introductionmentioning

confidence: 99%

Areeda–Turner in Two-Sided Markets

Behringer

Filistrucchi

2015

Rev Ind Organ

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We extend the Areeda-Turner rule to two-sided markets. We show that a two-sided monopolist may find it short-run profit-maximizing to charge a price below marginal cost on one side of the market. Hence showing that the price is below marginal cost on one side of a two-sided market cannot be considered a sign of predation. We then argue for a two-sided Areeda-Turner rule that takes into account price-cost margins on both sides of the market. Two examples highlight that applying a one-sided Areeda-Turner rule may lead one to assess legitimate prices as predatory or to consider predatory prices as legitimate.

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Price structure in two-sided markets: Evidence from the magazine industry

Cited by 298 publications

References 26 publications

Regulation of pharmaceutical prices: Evidence from a reference price reform in Denmark

Regulation of pharmaceutical prices: Evidence from a reference price reform in Denmark

Price discrimination in two-sided markets

Areeda–Turner in Two-Sided Markets

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