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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...
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with this contract type we follow the Limit Pricing theory and show that standard contract price could be used as an … more costly option for customers who have not switched to an alternative contract yet. As most German households are served … contract price could increases the incumbent’s profit. We then analyze our theoretical findings employing data for German …
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