When a third party payer (be
it a private insurer or a national health
service) contracts with health providers, the
third party payer (3PP) may make special
agreements with a subset of "preferred
providers". The consumers affiliated to the 3PP
then have cheaper (or even free) access to these
preferred providers than to other providers.
This chapter analyzes how providers compete to
become preferred providers.
Contractual design and PPPs
for hospitals: lessons for the Portuguese model.
Portuguese Government announced the launching of
partnerships (PPPs) to build hospitals with
feature that infrastructure construction and
management will be awarded to separate private
parties. Also, one of
the parties will be in charge of providing soft
facilities. We explore
alternative configurations of contracts and assess
equilibrium allocations attain the first-best
insurance and the cost-sharing of pharmaceutical R&D.
pricing has been proposed in the pharmaceutical industry
as a principle
to price discriminate among markets while allowing to
(fixed) R&D cost. However, such analyses neglect the
insurance or the fund raising costs for most of drug
incorporating these new elements, we aim at
building blocks towards an economic theory incorporating
and insurance coverage. We show how coinsurance affects
prices to pay for the R&D investment. We also show
certain conditions, there is no strategic incentive by
set coinsurance rates in order to shift the financial
R&D. This will have important implications to the
Ramsey pricing principles to pharmaceutical products
Negotiation and Bargaining in Health Care.
including prices as one major element, becomes a
relevant issue in the
analysis of performance of health care systems. Both
theoretical analysis have been produced, and are
reviewed below. This chapter does not aim to be an
encyclopedic view of the existing literature on
bargaining in health
care. Instead, we try to motivate the reader for the
associated with explicit bargaining between
third-party payers and
providers of health care (a relation which is, in
itself, only one in
many that exist in the health care sector).
Public Sector Capacity in Health Care.
present in countries with a National Health Service is
of a public and a private sector. Often, the public
with private providers while holding idle capacity. This
is often seen
as inefficiency from the management of public
facilities. We present
here a different rationale for the existence of such
idle capacity: the
public sector may opt to have idle capacity as a way to
power vis-\`a-vis the private provider, under the
assumption of a more
efficient private than the public sector.
Transport technologies and Location.
a simple model of spatial competition to analyze the impact of
a structural change in transaction (transportation) costs on the
location of firms. The distinctive feature of the model is the
existence of two markets which are non-connected. This means that
firm willing to sell in the other market must take into account a
fee in addition to the usual quadratic transport costs. Two
formulations for quadratic costs are explored, yielding different
results for location analysis. In particular, the principle of
differentiation may not hold depending on the nature of transport
care and payment
systems to providers.
Prevention has been a main issue
recent policy orientations in
health care. This renews the interest on how different
designs and the definition of payment schemes to providers may
the incentives to provide preventive health care.
We focus on the externality
from referral decisions from
primary to acute care providers. This makes our analysis
to most works in the literature allowing to address in a more
way the issue of preventive health care. The analysis is performed
through a series of examples combining different payment schemes
primary care center and hospital. When hospitals are reimbursed
according to costs, prevention efforts are unlikely to occur.
under a capitation payment for the primary care center and
budget for the hospital, prevention effortsincrease when shifting
an independent to an integrated management. Also, from a normative
standpoint, optimal payment schemes are simpler under joint
Associations in Health Care.
In several instances, third-party
payers negotiate prices of health
care services with providers. We show that a third-party payer may
prefer to deal with a professional association than with the
constituted by the more efficient providers, and then apply the
price to all providers. The reason for this is the increase in the
bargaining position of providers. The more efficient providers are
the ones with higher profits in the event of negotiation failure.
allows them to extract a higher surplus from the third-party
Health Care Providers: "Any Willing Provider" vs. Negotiation.
We address the question of how a
third-party payer (e.g. an
insurer) decides what providers to contract with. Two different
mechanisms are studied and their properties compared. A first
consists of the so-called “any willing provider” where the
third-party payer announces a contract and every provider freely
decides to sign it or not. The second mechanism is a bargaining
procedure with both providers set up by the third-party payer. The
finding is that the decision of the third-party payer depends on
surplus to be shared. When it is relatively high the third-party
prefers the any willing provider system. When, on the contrary,
the surplus is relatively low, the third-party payer will select a
Private Provision of
One of the mechanisms that is
implemented in the cost containment
wave in the health care sectors in western countries is the
by the third-party payer, of a set of preferred providers. The
insured patients have different access rules to such providers
when ill. The rules specify the co-payments patients must
when using an
out-of-plan care provider. This paper studies the competitive
process among providers in terms of both prices and qualities.
Competition is influenced by the status of providers as in-plan
or out-of-plan care providers. Also, there is a moral hazard of
provider choice related to the trade-off between freedom to choose
and the need to hold down costs.
It is possible to achieve the
first-best allocation by an
definition of the reimbursement scheme when decisions on prices
and qualities are taken simultaneously (that we relate to primary
health care sectors). In contrast, some type of regulation is
needed to achieve the optimal solution when decisions are
(specialized health care sector). We also derive normative
on how price controls should be implemented in some European Union
On the Effects
We show that the nature and extent
trade is significantly
affected by the pricing policy that firms are allowed to employ.
A switch from discriminatory to non-discriminatory pricing (e.g.
strict antidumping laws) lead to a switch from two-way trade to
one-way trade. It is far from necessarily being the case that
the consumers will be favoured by such policy switch. It is also
the case that distribution of gains is significantly affected
by relative country size.
The Role of
Information in Licensing
This paper analyzes the contract
terms of licensing agreements,
based on a sample of contracts of transmission of technology
Spanish and foreign firms. It also presents a model that is in
accordance with some stylized facts. We will focus our attention
on the elements that explain the contract terms. In particular
we analyze the consequences of the inclusion of know-how in the
license agreement on the contract terms.
This note presents a modification
Rubinstein's model in
which players can choose whether to be fast or slow in responding
to their opponents's proposals. We characterize the effects of
such choice on the outcome of the bargaining and give predictions
on what rhythm will players choose in equilibrium.
Mercado Unico sobre los Sectores
Este artículo analiza los
efectos del proceso de
de España a la CEE y de la futura creación del
Unico sobre la Industria Española. Algunos sectores
han sufrido en el proceso, otros han superado mejor la prueba.
En cualquier caso, la inversión directa y las adquisiciones
de empresas con fondos procedentes del extrerior han atenuado
los costes de la integración. Los efectos más
más importantes ya han tenido lugar y no se
con tanta intensidad durante la construcción del Mercado
en Precios y Localización.
El análisis de empresas
multiproducto en modelos espaciales
à la Hotelling donde los costes de transporte se definen
como funciones cuadráticas de la distancia, nos muestra
que las empresas no tienen incentivos para proliferar sus
El objetivo de esta nota es examinar la robustez de este resultado
introduciendo diferentes escenarios, tanto en términos
de la especificación del espacio (unidimensional), como
de la función de costes de transporte. Demostramos que
tal resultado es robusto a la definición del espacio pero
no lo es bajo formas más generales de los costes de
de Producto: Una guía selectiva de la Literatura.
Competition in Markets for Dichotomous
The paper deals with price rivalry
between two sellers of a
differentiated good. Each firm occupies one of the two possible
locations in the characteristics space considered. This resembles
real situations like the choice between dichotomous substitutes,
or examples coming from spatial economics. The consumers'
is partitioned in two groups according to preferences and the
population density is constituted by two atoms. Transportation
costs vary across consumers. Nevertheless, the resulting firms'
demand functions share the continuity property. At a
equilibrium the prices of the two goods differ and some consumers
who rank highest the more popular brand find it convenient to
purchase the less expensive alternative. Higher one-firm
ratios are found to be consistent with lower equilibrium prices.
This last feature is verified comparing the non-cooperative
stemming from different original population densities.
Proliferation with Vertical
It is known that under horizontal
firms decide sequentially upon locations and prices, they give
up the possibility of proliferation.We propose a spatial model
of vertical differentiation to check the robustness of such an
outcome to the specification of product differentiation.
Competition Dominate Market
This note analyses duopoly
competition in a two stage
game, while allowing each firm to establish a couple of outlets.
Both the circle and the line model of spatial competition are
considered. Our main result is clear-cut: in equilibrium neither
firm will take up the opportunity of opening two stores. This
is a warning that market segmentation, i.e. competition for
outlets, might not be attractive at all, because it entails more
intense price competition.