Price Discrimination In Pharmaceutical Industry Case Study
PRICE DISCRIMINATION IN PHARMACEUTICAL COMPANIES
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Contents
Introduction 2
Price discrimination 2
Explain what price discrimination does to producer and consumer surplus? 3
Why price discrimination is justified by MOMA? 5
Conclusion 6
Reference 8
Introduction
The report will discuss in detail about a common type of pricing method that every business engages in. this method is called as Price discrimination. The point of debate is whether price discrimination is good or bad as far as social welfare is concerned (Aguirre et al, 2010). The debate on price discrimination is there since ages now and it can be easily explained that under specific restrictive circumstances, price discrimination will definitely decrease social welfare. There are number of
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This has been a debatable topic for long and the difference in prices is the result of price discrimination practice in pharmaceutical industry where pricing is actually based on the price elasticity of demand (Ellison and Snyder, 2010). The price discrimination, in many pharmaceutical companies adopts those prices which is different for in different geography and socio economic segments. There are number of pharmaceutical companies who actually practice a pricing strategy called tiered pricing within a country in order to increase the profits and to do so it also increase the total access of patents within the country (Danzon et al, 2015). There are many alternatives as well where companies charge different prices is to charge one single price for all consumers and which would result for some consumer or market for not catered at all. This is because of the fact if in case medicine companies are charging single price, the price will have to be set as such it is high enough to make profits (Morgan et al,
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