Within a horizontal differentiation model and allowing for heterogeneous qualities, we analyze the effects of reference pricing reimbursement on firms' pricing strategies. With this analysis we find inherent incentives for firms' pricing behavior, and consequently we shed some light on the time...

Abstract We analyse the properties of optimal price adjustment to hospitals when no lump-sum transfers are allowed and when prices differ to reflect observable exogenous differences in costs. We find that: (a) when the marginal benefit from treatment is decreasing and the cost function is the...

We propose a two-stage model to study the impact of different hospitals' governance frameworks on the optimal contracts designed by third-party payers when patients' disease severity is the private information of the hospital. In the second stage, doctors and managers interact within either a...