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Paying for express checkout: competition and price discrimination in multi-server queuing systems.

ABSTRACT: We model competition between two firms selling identical goods to customers who arrive in the market stochastically. Shoppers choose where to purchase based upon both price and the time cost associated with waiting for service. One seller provides two separate queues, each with its own server, while the other seller has a single queue and server. We explore the market impact of the multi-server seller engaging in waiting cost-based-price discrimination by charging a premium for express checkout. Specifically, we analyze this situation computationally and through the use of controlled laboratory experiments. We find that this form of price discrimination is harmful to sellers and beneficial to consumers. When the two-queue seller offers express checkout for impatient customers, the single queue seller focuses on the patient shoppers thereby driving down prices and profits while increasing consumer surplus.

SUBMITTER: Deck C

PROVIDER: S-EPMC3965397 | biostudies-literature | 2014

REPOSITORIES: biostudies-literature

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Paying for express checkout: competition and price discrimination in multi-server queuing systems.

Deck Cary C Kimbrough Erik O EO Mongrain Steeve S

PloS one 20140325 3

We model competition between two firms selling identical goods to customers who arrive in the market stochastically. Shoppers choose where to purchase based upon both price and the time cost associated with waiting for service. One seller provides two separate queues, each with its own server, while the other seller has a single queue and server. We explore the market impact of the multi-server seller engaging in waiting cost-based-price discrimination by charging a premium for express checkout. ...[more]

PMID: 24667809

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Project description:ImportancePrice decreases of biologic and biosimilar products in Medicare Part B have been minimal, even with biosimilar competition. Medicare reimburses clinicians for biologics and biosimilars differently than for brand-name and generic drugs, which has generated greater price reductions.ObjectiveTo characterize the nature of price competition among brand-name and generic drugs under Medicare Part B and to estimate the cost savings to the program of subjecting biologic and biosimilar therapies to a similar price competition.Design, setting, and participantsThis cohort study analyzed all brand-name drugs and their approved generic versions as well as biologics and biosimilars that were reimbursed under Medicare Part B from quarter 1 of 2005 to quarter 2 of 2021. Two separate data sets were created: brand-name and generic drugs as well as biologics and biosimilars data sets. Brand-name products with generic versions that were introduced before 2005 were excluded, and so were vaccines.ExposuresNumber of generic and biosimilar competitors over time.Main outcomes and measuresPrice change as a percentage of the brand-name drug or biologic price in the quarter before generic or biosimilar competition. Price change was modeled using a linear, fixed-effects time series regression, with the number of generic or biosimilar competitors as the main covariate. Time was expressed as the number of quarters since the first generic or biosimilar competitor entered the market. Savings were estimated by projecting the regression model of brand-name and generic drug competition to observed biologic and biosimilar competition and by applying the estimated price reduction to actual Medicare spending for those products from 2015 to 2019.ResultsOf the 988 Healthcare Common Procedure Coding System codes identified, 50 (5.0%) met the inclusion criteria for the brand-name and generic drug data set and 28 (2.8%) met the criteria for the biologic and biosimilar data set. The first generic competitor was associated with reduced drug prices by 17.0%, the second competitor with a 39.5% decrease, the third competitor with a 52.5% decrease, and the fourth and more competitors with a 70.2% decrease (price decline was measured from brand-name drug price before the first generic competitor rather than from price established with fewer competitors). If biologics and biosimilars were subject to the same Medicare reimbursement framework as brand-name and generic drugs, Medicare spending on these products was estimated to have been 26.6% lower ($1.6 billion) from 2015 to 2019.Conclusions and relevanceThis study found minimal uptake of biosimilars and limited price reductions for biologics and biosimilars under the current Medicare Part B reimbursement policy. Adopting the bundled biosimilar reimbursement structure for biologic and biosimilar therapies may be associated with substantial savings and encourage greater biosimilar market entry.

Project description:A temporal separation of energetically costly life history events like reproduction and maintenance of the integumentary system is thought to be promoted by selection to avoid trade-offs and maximize fitness. It has therefore remained somewhat of a paradox that certain vertebrate species can undergo both events simultaneously. Identifying potential costs of overlapping two demanding life history stages will further our understanding of the selection pressures that shape the temporal regulation of life history events in vertebrates. We studied free-living tropical Slaty brush-finches (Atlapetes schistaceus), in which individuals spontaneously overlap reproduction and moult or undergo both events in separation. To assess possible costs of such an overlap we quantified feather quality and flight performance of individuals in different states. We determined individual's life history state by measuring gonad size and scoring moult stage, and collected a newly grown 7(th) primary wing feather for later analysis of feather quality. Finally, we quantified flight performance for each individual in the wild. Overlapping individuals produced lighter and shorter wing feathers than individuals just moulting, with females decreasing feather quality more strongly during the overlap than males. Moreover, overlapping individuals had a reduced flight speed during escape flights, while their foraging flight speed was unaffected. Despite overlappers being larger and having a smaller wing area, their lower body mass resulted in a similar wing load as in breeders or moulters. Individuals measured repeatedly in different states also showed significant decreases in feather quality and escape flight speed during the overlap. Reduced escape flight speed may represent a major consequence of the overlap by increasing predation risk. Our data document costs to undergoing two life history stages simultaneously, which likely arise from energetic trade-offs. Impairments in individual quality and performance may represent important factors that select for temporal separation of life history stages in other species.

Dataset Information

Paying for express checkout: competition and price discrimination in multi-server queuing systems.

Publications

Paying for express checkout: competition and price discrimination in multi-server queuing systems.

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