The price-lead effect

Figure 3-5 Example for national price paths of the price-lead effect...

Therefore, the price-lead effect of lead markets is clearly supported in the case of cellular mobile telephony as the mechanism of international diffusion and prevalence. National price differences in mobile telephony can be the result of national differences in... 

The price-lowering effect of user competence is an argument that shows that Levitt s (1983) low-price argument, incorporated in the price advantage as a lead market factor, is not basically opposed to the sophistication of demand argument. Levitt s low-price argument, however, seems more applicable to products... 

Reference pricing was not introduced in Spain until December 2000. The fact that it is applied exclusively to bio-equivalent products leads, in the opinion of the authors, to the assumption that its effect on expenditure is limited, as a major market share is acquired by recently introduced drugs. The level at which the reference price is fixed is an important factor. For non-patented products, price competition should push the price towards the marginal cost, and therefore a reference price that is clearly higher than the cheapest generic could actually become a barrier to price competition in this case. 

In this review, we focus on the effect of anisotropic interactions, in particular parallel attractions, and demonstrate that the inclusion of such interactions in a model leads to a great richness in possible polymer phase behavior. From a practical point of view, the model that we describe has the advantage that it is computationally very cheap—although this advantage comes at the price of sacrificing the greater realism of an off-lattice model. 

Low procurement prices lead to a very positive value-added index and hence to higher profits compared to a basis scenario. Low procurement prices have no volume effect, since production quantities cannot be increased in the situation of full utilization. High raw material prices result in a reduction of volume indices. 

Removing profit would lead to the right conclusion, analytically, but what advice does it give decision makers If economic profits are indeed positive, but the decision on whether or not to permit firms to develop and introduce a new product is based on AWP less above-normal profits, more products will be judged to be effective than if AWP had been used. But if firms are in fact reimbursed at AWP, their expected profit from investment in R D will rise. The products firms are thus induced to develop because of the excess profits may not be efficient, and, from the standpoint of economic efficiency, they should not be produced. Yet the price signals will be telling firms to invest. Some method will need to be found to resolve this conflict. Efficient decisions based on correct cost-effectiveness analysis may well conflict with the price signals that may follow for implementation of those decisions. This is an issue for both country U and country T. 

Given such large investment costs and risks, very little innovative pharmaceutical research would take place in a free market system. The reason is that an innovator would bear the full cost of its failures, but would be unable to profit from its successes because competitors would copy or retro-engineer its invention (effectively free-riding on its effort) and then drive down the price close to the marginal cost of production. This is a classic instance of market failure leading to a collectively irrational (Pareto-suboptimal) outcome in which medical innovation is undersupplied by the market. 

In the case of lead-acid batteries, recycling of exhausted units is undertaken worldwide and the process is both efficient and cost-effective. It has been calculated that almost 90% of spent lead-acid batteries are sent back to recycling plants. This high return is explained by the large scale of lead-acid cell production, which makes recycling mandatory in order to control the price of lead on the world market. 

---