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Granlund, D. & Bergman, M. A. (2018). Price competition in pharmaceuticals - Evidence from 1303 Swedish markets.. Journal of Health Economics, 61, 1-12
Open this publication in new window or tab >>Price competition in pharmaceuticals - Evidence from 1303 Swedish markets.
2018 (English)In: Journal of Health Economics, ISSN 0167-6296, E-ISSN 1879-1646, Vol. 61, p. 1-12Article in journal (Refereed) Published
Abstract [en]

We study the short- and long-term price effects of the number of competing firms, using panel-data on 1303 distinct pharmaceutical markets for 78 months within a reference-price system. We use actual transaction prices in an institutional setting with little scope for non-price competition and where simultaneity problems can be addressed effectively. In the long term, the price of generics is found to decrease by 81% when the number of firms selling generics with the same strength, form and similar package size is increased from 1 to 10. Nearly only competition at this fine-grained level matters; the effect of firms selling other products with the same active substance, but with different package size, form, or strength, is only a tenths as large. Half of the price reductions take place immediately and 70% within three months. Also, prices of originals are found to react to competition, but far less and much slower.

Keywords
Adjustment, Brand-name drugs, Dynamic, Generic drugs, Generic substitution, Pharmaceutical industry, Price competition, Reference price
National Category
Economics
Identifiers
urn:nbn:se:sh:diva-36014 (URN)10.1016/j.jhealeco.2018.06.009 (DOI)30007260 (PubMedID)
Available from: 2018-07-19 Created: 2018-07-19 Last updated: 2018-07-19Bibliographically approved
Bergman, M., Felländer, A. & Åsbrink, E. (2017). Handelns betydelse: då, nu och i framtiden. Stockholm: Handelns ekonomiska råd
Open this publication in new window or tab >>Handelns betydelse: då, nu och i framtiden
2017 (Swedish)Report (Other (popular science, discussion, etc.))
Place, publisher, year, edition, pages
Stockholm: Handelns ekonomiska råd, 2017. p. 58
Keywords
E-handel, detaljhandel
National Category
Economics and Business
Identifiers
urn:nbn:se:sh:diva-34015 (URN)978-91-86508-44-9 (ISBN)
Available from: 2018-01-03 Created: 2018-01-03 Last updated: 2018-01-08Bibliographically approved
Bergman, M. A., Granlund, D. & Rudholm, N. (2017). Squeezing the Last Drop Out of Your Suppliers: An Empirical Study of Market-Based Purchasing Policies for Generic Pharmaceuticals. Oxford Bulletin of Economics and Statistics, 79(6), 969-996
Open this publication in new window or tab >>Squeezing the Last Drop Out of Your Suppliers: An Empirical Study of Market-Based Purchasing Policies for Generic Pharmaceuticals
2017 (English)In: Oxford Bulletin of Economics and Statistics, ISSN 0305-9049, E-ISSN 1468-0084, Vol. 79, no 6, p. 969-996Article in journal (Refereed) Published
Abstract [en]

We study the effect of the degree of exclusivity for the lowest bidder on the average price of generic pharmaceuticals in the short and long terms. Our results indicate that a 1-percentage-point gain in market share of the lowest bidder reduces average costs by 0.2% in the short term and 0.8% in the long term, but also reduces the number of firms by 1%. We find that reducing the number of firms has a strong positive (and hence counteracting) effect on average prices, a 1% reduction raising prices by approximately 1%.

National Category
Economics
Identifiers
urn:nbn:se:sh:diva-32453 (URN)10.1111/obes.12180 (DOI)000414340300003 ()2-s2.0-85017351221 (Scopus ID)
Funder
Swedish Competition Authority
Available from: 2017-04-28 Created: 2017-04-28 Last updated: 2018-04-05Bibliographically approved
Lundberg, S. & Bergman, M. A. (2017). Tendering design when price and quality is uncertain. International Journal of Public Sector Management, 30(4), 310-327
Open this publication in new window or tab >>Tendering design when price and quality is uncertain
2017 (English)In: International Journal of Public Sector Management, ISSN 0951-3558, E-ISSN 1758-6666, Vol. 30, no 4, p. 310-327Article in journal (Refereed) Published
Abstract [en]

Purpose: The purpose of this paper is to analyze how local and central authorities choose between lowest price and more complex scoring rules when they design supplier-selection mechanisms for public procurements. Five hypotheses are tested: a high level of cost uncertainty and highly non-verifiable quality makes the use of the lowest-price supplier-selection method less likely. Organizational habits and transaction-cost considerations influence the choice of mechanism. Strong quality concerns make complex rules more likely. Design/methodology/approach: The analysis departures from normative theory (rational choice) and is based on the regression analysis and survey data comprising a gross sample of 40 contracting authorities and detailed information about 651 procurements. Findings: More complex scoring rules are used more often when the authority is uncertain about costs and about delivered quality. Authority effects are also found to directly and indirectly influence the choice of supplier-selection method, suggesting that tendering design is partly driven by local habits and institutional inertia. Practical implications: The authors argue that, from a normative point of view, lowest price is an adequate method when the degree of uncertainty is low, for example, because the procured products are standardized and since quality can be verified. When there is significant cost uncertainty, it is better to use the so-called economically most advantageous tender (EMAT) method. (Preferably this should be done by assigning monetary values to different quality levels.) If there is significant uncertainty concerning delivered quality, the contracting authority should retain a degree of discretion, so as to be able to reward good-quality performance in observable but non-verifiable quality dimensions; options to extend the contract and subjective assessments of quality are two possibilities. The main findings are that EMAT and more complex scoring rules are used more often when the contracting authorities report that they experience substantial uncertainty concerning delivered quality and actual costs and that these factors tend to decrease the weight given to price, in line with the predictions. However, the authors also find that this result is mainly driven by variations between authorities, rather than by between-products variation for the same authority. This is from a training of professionals and regulation perspective of policy relevance. Social implications: Contract allocation based on habits rather than rational ground could implicate the waste of resources (tax payers money) as it adventures the matching of the preferences of the public sector (the objective, subject matter, of the procurement) and what the potential supplier offers in its tender. Originality/value: Although the principles for supplier selection are regulated by law they give the contracting authority substantial freedom in designing the scoring rule and in choosing what quality criteria to use. The tension between different objectives and the more general question whether the choices made by authorities reflect rational decision making or institutional inertia together motivate the current study. While the design of the supplier-selection mechanism is an important consideration in procurement practice, it has attracted relatively little attention from the academic community.

Keywords
Auctions, Organizational process model, Public purchases, Scoring rules, Supplier evaluation, Supplier selection
National Category
Economics
Identifiers
urn:nbn:se:sh:diva-32632 (URN)10.1108/IJPSM-04-2016-0063 (DOI)000401365900002 ()2-s2.0-85019169824 (Scopus ID)
Available from: 2017-05-29 Created: 2017-05-29 Last updated: 2018-04-05Bibliographically approved
Bergman, M. A., Johansson, P., Lundberg, S. & Spagnolo, G. (2016). Privatization and quality: Evidence from elderly care in Sweden. Journal of Health Economics, 49, 109-119
Open this publication in new window or tab >>Privatization and quality: Evidence from elderly care in Sweden
2016 (English)In: Journal of Health Economics, ISSN 0167-6296, E-ISSN 1879-1646, Vol. 49, p. 109-119Article in journal (Refereed) Published
Abstract [en]

Non-contractible quality dimensions are at risk of degradation when the provision of public services is privatized. However, privatization may increase quality by fostering performance-improving innovation, particularly if combined with increased competition. We assemble a large data set on elderly care services in Sweden between 1990 and 2009 and estimate how opening to private provision affected mortality rates – an important and not easily contractible quality dimension – using a difference-in-difference-in-difference approach. The results indicate that privatization and the associated increase in competition significantly improved non-contractible quality as measured by mortality rates. © 2016

Keywords
Competition, Incomplete contracts, Mortality, Outsourcing, Public procurement
National Category
Economics
Identifiers
urn:nbn:se:sh:diva-30642 (URN)10.1016/j.jhealeco.2016.06.010 (DOI)000384869400009 ()27394007 (PubMedID)2-s2.0-84977111534 (Scopus ID)
Funder
Swedish Research Council, 2008-22664-58604-33Swedish Competition Authority, 111/2008Forte, Swedish Research Council for Health, Working Life and Welfare, 2013-2482
Available from: 2016-07-20 Created: 2016-07-19 Last updated: 2018-03-01Bibliographically approved
Carlsson, K. & Bergman, M. (2015). Konkurrenslagen: en kommentar (2ed.). Stockholm: Norstedts Juridik AB
Open this publication in new window or tab >>Konkurrenslagen: en kommentar
2015 (Swedish)Book (Other academic)
Place, publisher, year, edition, pages
Stockholm: Norstedts Juridik AB, 2015. p. 748 Edition: 2
Series
Norstedts gula bibliotek
Keywords
Konkurrensrätt, kartell, koncentration, missbruk, dominerande ställning
National Category
Law (excluding Law and Society)
Research subject
Politics, Economy and the Organization of Society
Identifiers
urn:nbn:se:sh:diva-28702 (URN)9789139016113 (ISBN)
Available from: 2015-11-08 Created: 2015-11-08 Last updated: 2016-09-19Bibliographically approved
Bergman, M. & Jordahl, H. (2014). Goda år på ålderns höst?: En ESO-rapport om konkurrens i äldreomsorgen. Stockholm: Finansdepartementet, Regeringskansliet
Open this publication in new window or tab >>Goda år på ålderns höst?: En ESO-rapport om konkurrens i äldreomsorgen
2014 (Swedish)Report (Other academic)
Place, publisher, year, edition, pages
Stockholm: Finansdepartementet, Regeringskansliet, 2014. p. 124
Series
Rapport till Expertgruppen för studier i offentlig ekonomi ; 2014:1
Keywords
Äldreomsorg, brukarval, konkurrens, välfärd, offentlig sektor, upphandling
National Category
Economics
Research subject
Politics, Economy and the Organization of Society
Identifiers
urn:nbn:se:sh:diva-25580 (URN)978-91-38-24074-8 (ISBN)
Available from: 2014-12-19 Created: 2014-12-19 Last updated: 2016-09-19Bibliographically approved
Bergman, M., Rudholm, N. & Granlund, D. (2014). Reforming the Swedish pharmaceuticals market: Consequences for costs per defineddaily dose. Stockholm: HUI Research
Open this publication in new window or tab >>Reforming the Swedish pharmaceuticals market: Consequences for costs per defineddaily dose
2014 (English)Report (Other academic)
Abstract [en]

In 2009, the Swedish pharmaceuticals market was reformed. One of the stated policygoals was to achieve low costs for pharmaceutical products dispensed in Sweden.

Prices and sales data for off-patent brand-name and generic pharmaceuticals have beencollected, and a log-linear regression model was used to estimate how the policy changes affected thecost per defined daily dose.

The estimated effect is a 19 percent cost reduction per defined daily dose at the retail leveland a 35 percent reduction in the prices at the wholesale level (pharmacies' purchase prices). Theempirical results suggest that half of the retail-level price reduction is due to the introduction of a pricecap for products going off patent and half is due to other components of the reform. Measured at thewholesale level the latter effect is larger than the former.

The reforms reduced the cost per defined daily dose for consumers while beingadvantageous also for the pharmacies, who saw their retail margins increase due to the reform.However, pharmaceutical firms supplying off-patent pharmaceuticals experienced a clear reduction inthe price received for their products.

Place, publisher, year, edition, pages
Stockholm: HUI Research, 2014. p. 14
Series
HUI Working Papers ; 105
Keywords
Pharmaceutical industry, national pharmacy monopoly, pharmacy deregulation, competition, generics, pricing
National Category
Economics
Research subject
Politics, Economy and the Organization of Society
Identifiers
urn:nbn:se:sh:diva-25756 (URN)
Funder
Swedish Competition Authority
Available from: 2015-01-09 Created: 2015-01-09 Last updated: 2016-09-19Bibliographically approved
Bergman, M. (2014). Svensk marknads- och konkurrenspolitik (11.[omarb.]ed.). In: Lars Hultkrantz och Hans Tson Söderström (Ed.), Marknad och politik: (pp. 253-289). Lund: Studentlitteratur
Open this publication in new window or tab >>Svensk marknads- och konkurrenspolitik
2014 (Swedish)In: Marknad och politik / [ed] Lars Hultkrantz och Hans Tson Söderström, Lund: Studentlitteratur , 2014, 11.[omarb.], p. 253-289Chapter in book (Other academic)
Place, publisher, year, edition, pages
Lund: Studentlitteratur, 2014 Edition: 11.[omarb.]
Keywords
Konkurrens, konkurrenspolitik, reglering, avreglering, marknad
National Category
Economics
Research subject
Politics, Economy and the Organization of Society
Identifiers
urn:nbn:se:sh:diva-25758 (URN)978-91-44-10091-3 (ISBN)
Available from: 2015-01-09 Created: 2015-01-09 Last updated: 2016-09-19Bibliographically approved
Bergman, M. & Lundberg, S. (2014). Tendering Design when Price and Quality Is Uncertain: Theory and Evidence from Public Procurement. Umeå: Umeå universitet
Open this publication in new window or tab >>Tendering Design when Price and Quality Is Uncertain: Theory and Evidence from Public Procurement
2014 (English)Report (Other academic)
Abstract [en]

Departing from a simple normative theory for the choice between lowest price, highest quality (beauty contest) and more complex scoring rules, we empirically investigate the behavior of local and central authorities. We survey a gross sample of 40 contracting entities about perceived key characteristics of products bought in 651 public procurements and collect data on supplier selection methods for these procurements. We compare actual scoring rules with theoretical norms and analyze what product characteristics make deviation from the norm more or less likely. In addition, a control group of 275 authorities was surveyed about similar but hypothetical procurements. We find that more complex scoring rules are used more often when the authority is uncertain about costs and about delivered quality, in accordance with our hypotheses. However, authority effects are also found to directly and indirectly influence the choice of supplier-selection method, suggesting that tendering design is partially driven by local habits or institutional inertia.

Place, publisher, year, edition, pages
Umeå: Umeå universitet, 2014. p. 38
Series
Umeå Economic Studies, ISSN 0348-1018 ; 895
Keywords
Auctions, Contracting, Habit behavior, Moral hazard, Scoring rules, Supplier selection
National Category
Economics
Research subject
Politics, Economy and the Organization of Society
Identifiers
urn:nbn:se:sh:diva-25755 (URN)
Available from: 2015-01-09 Created: 2015-01-09 Last updated: 2016-09-19Bibliographically approved
Organisations
Identifiers
ORCID iD: ORCID iD iconorcid.org/0000-0001-5026-9479

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