Rebate Scheme Research Articles

The Intel saga: what went wrong with the Commission’s AEC test (in the General Court’s view)?

ABSTRACT The General Court’s annulment of the European Commission’s finding that Intel’s conditional rebate scheme was abusive underscores the Court’s readiness to scrutinize in detail the economic analysis, including the as-efficient competitor (AEC) test. This paper critically reviews some of the key errors that the Commission, according to the Court, made in relation to the implementation of that test, focusing on some of its main ingredients, namely the contestable share of the market, the conditional portion of the rebates, and the relevant cost benchmark. We conclude that the Court’s assessment provides useful lessons for how to perform thorough and robust economic analysis not only within the context of an AEC test but in competition cases more generally. At the same time, considering the test’s intrinsic limitations, we find that, aside from the test’s implementation, its informative value should also be explored, based on economic theory and the facts of the case.

An optimal strategy of advertising and electronic word-of-mouth with considering rebates

PurposeThis paper aims to examine the optimal promotion strategy of an e-retailer, who may advertise, or launch rebates initiative to encourage consumers' disseminating electronic word-of-mouth (eWOM) messages, with an aim to boost product sales.Design/methodology/approachThis paper analyzes the decisions of the e-retailer in a two-period model, using utility function approach and backward induction method, and obtains the optimal solutions in four promotion strategies.FindingsThe study finds that rebate scheme greatly impacts the timing of advertising, and neither lower nor higher consumers' eWOM effort invariably benefits the retailer, rather, a medium level is the best choice for the retailer. When eWOM impact power is at a relatively high level, it can supplement advertising effect to attract more consumers' purchase. Otherwise, eWOM may counteract the role of advertising.Originality/valueDifferent from the extant literature focusing on advertising or eWOM without rebates, the paper studies the issue of advertising and eWOM with rebates in two- period model which seldom addresses before the authors examine the optimal timing of advertising and eWOM with/without rebates in four promotion strategies i.e. the A-NE model the NE-A model the A-ER model and the ER-A model.

Optimal joint trade‐in rebate strategies in a retailer‐led supply chain

This study investigates the joint trade‐in rebate strategies in a supply chain with independent manufacturers selling substitutable products via a dominant retailer. We model their interplay as a Stackelberg game and analyze their joint trade‐in rebate decisions. We find that the differentiated trade‐in rebate scheme is better for the retailer, and the manufacturers cooperating in making their trade‐in rebate decisions can achieve win‐win results in most cases. However, replacement consumers could benefit from the retailer's uniform trade‐in rebate scheme and the manufacturers not cooperating in their trade‐in decisions. The latter is always more beneficial to the environment.

Outcome-Based Reimbursement: The Solution to High Drug Spending?

Problem definition: The continuously soaring prices of new drugs and their uncertain effectiveness in clinical practice have put substantial risks on insurers/payers. To induce insurer coverage of their new drugs, manufacturers start to propose an innovative outcome-based reimbursement (OBR) scheme under which manufacturers refund insurers (and possibly patients) if the drugs fail to achieve a prespecified treatment target. We investigate the impact of OBR on insurers, manufacturers, and patients. Academic/practical relevance: Although OBR sounds intuitively appealing, its true impact is under much debate and depends particularly on the design of OBR. Our study sheds light on the optimal design of OBR and the debate around OBR, considering key trade-offs and key elements not covered in prior literature. Methodology: We develop a Stackelberg game under which the manufacturer designs a rebate scheme for its drug, either non-OBR or OBR, considering the trade-off between a favorable formulary position and the rebate provided. The insurer subsequently determines its formulary for the drug as well as other alternative drugs within the same disease category considering the trade-off between its spending and patient health benefits. Using data on 14 drugs treating a common disease, hyperlipidemia, we estimate through a multinomial logit model the demand of the 14 drugs and conduct counterfactual analyses on the impact of OBR. Results: Under the optimal OBR, the manufacturer lowers the insurer’s risk but inflates the wholesale price (hence, may not reduce insurer spending). OBR also induces a better formulary position for the manufacturer, which, hence, improves patient access to new drugs. Further, rebates to the insurer and patients affect demand through different mechanisms. Including patient rebates in OBR lowers patient expenses and increases drug demand but further increases insurer spending. Managerial implications: We demonstrate the structure of an optimal formulary and its application in practice. We caution insurers/payers who are seeking OBR to reduce their spending.

Loyalty Rebates under EU Competition and US Antitrust Law

The present chapter investigates the antitrust rules applicable to loyalty or fidelity rebate schemes under EU competition and US antitrust law. It finds that antitrust liability for a dominant company will more readily be established in the EU, where the applicability of economics-based tests is still being navigated. In the US, rebates by a monopoly player will usually be found to be anti-competitive where they constitute predatory pricing, although they might also run into antitrust liability where they constitute exclusive dealing arrangements. This divergence can be explained by the different ideological underpinnings in the two jurisdictions. Overall, however, the (case) law on loyalty rebates is still in a state of flux in both jurisdictions. In recent years, both jurisdictions have gradually moved to a little more convergence in their treatment of exclusivity rebates. At this point, however, both the US Supreme Court and the European Court of Justice will need to weigh in on the future of the antitrust assessment of loyalty-inducing rebates.

Incentivizing Groundwater Recharge in the Pajaro Valley Through Recharge Net Metering (ReNeM)

Decades of groundwater overuse in the Pajaro Valley have contributed to an estimated groundwater overdraft of 12,100 acre-feet per year (AFY) in the basin. In response, the Pajaro Valley Water Management Agency adopted a pilot groundwater recharge program, called Recharge Net Metering (ReNeM). ReNeM encourages development of infiltration projects on private or public land by offering a rebate on groundwater pumping fees based on the net increase in infiltration. The rebate uses the following equation: Rebate = W50x (Inftot − Infinc), where Infinc is the incidental infiltration that would have occurred without the project, Inftot is total measured infiltration, and W50 represents the proportion (50%) of the pumping fee assessed to the landowner based on location. The goal of Pajaro Valley’s ReNeM pilot program is to infiltrate 1,000 AFY to the aquifer by creating and operating infiltration projects at multiple sites. This effort will help reduce groundwater overdraft and associated undesirable consequences (seawater intrusion, disconnection with surface water, and degradation to water quality). This case study analyzes the local conditions and institutions that make the ReNeM pilot program feasible, including previously established groundwater pumping fees, metered wells, and the existence of third-party certifiers able to verify the results of project sites. The ReNeM pilot has enabled increased recharge by creating new incentives that have drawn PV Water, landowners, and tenant farmers to develop recharge projects. The ReNeM pilot is the first and thus far only application of this approach, but the methods used by ReNeM may have potential applicability elsewhere. This potential will hinge on whether the pilot can prove the effectiveness of the rebate scheme and demonstrate measurable benefits in the Pajaro Valley.

The devil in the tiers.

ABSTRACTPrescription drug spending in the USA has soared, fueled by rising drug prices. A critical mechanism for restraining drug prices is the formulary tiering system. Although tiering should reflect the cost of a drug—and reward patients who choose less-expensive drugs—something is seriously amiss. Using Medicare claims data from roughly one million patients between 2010 and 2017, this article finds troubling amounts of distorted tiering and wasted cost. Increasingly, generics are shifted to more expensive—and therefore less accessible—tiers. The percentage of generics on the least-expensive tier drops from 73% to 28%; the percentage of drugs on inappropriate tiers rises from 47% to 74%. Considering only costs paid by patients and the federal Low-Income Subsidy Program, tier misplacement cumulatively costs society $13.25 billion over the time period. An unruly problem demands a disruptive solution. This article advances the counterintuitive regulatory reform that tiering should be based on a drug’s list price. Yes, list price—that roundly dismissed figure—should become the touchstone. This would deter incentive-distorting rebate schemes while recognizing that many people already pay list price. It is a remarkably streamlined approach for cutting through a wide swath of perverse incentives and manipulations.

Caught in the war against gambling: A critical analysis of law history and policy making in video games in Greece

The advent of the video game industry brought about new cultural policies in both the national and international levels. In particular, incentives and flexible funding programmes for the production of video games have become a key pillar of support for small, domestic, but also global game companies. In Greece, video game policy history has followed the developments and legal entanglements of gambling regulation, with serious national and international consequences. From the Royal Decree of 1971 to Law 3037/2002 that banned all games in public and private places until the most recent Law 4487/2017, which established a cash rebate scheme for audio-visual productions, this article aims to analyse Greece’s video game policy-making as captured through scattered laws, media articles and personal testimonies.

Is demand side response a woman's work? Domestic labour and electricity shifting in low income homes in the United Kingdom

This paper discusses a utility-led research project which piloted smart meters and DSR products (a time of use tariff and a critical peak rebate scheme) with 500 low income households in London. As households set about the task of adjusting their electricity use in response to shifting prompts, they revealed the importance of managing domestic labour to generate value from DSR products and the role of women in carrying this out. The experience is at odds with the smart future more typically imagined in which chore-doing is handed over to feminized AI assistants who orchestrate IoT appliances to create comfort and capture value. Strengers has cautioned against constructing a smart future to serve `Resource Man'. Drawing on trial participants' experiences, the paper develops the concept of `Flexibility Woman' in order to bring the realities of domestic labour more sharply into focus. The paper argues that chore-doing needs to become a narrative in the smart future to understand the burdens and opportunities for `Flexibility Woman' to create value from her labour. It suggests that women unable to afford a surrogate AI wife may find themselves becoming `Flexibility Woman' or else excluded from accessing the cheaper, greener electricity of the future. It also suggests that ignoring gender risks undermining the impacts that policy makers and network operators hope to achieve through DSR.The paper makes a unique contribution to our understanding of how DSR relates to gender roles and what the implications are for the effectiveness and inclusivity of flexibility products.

322 Do Current Best Practice Guidelines Support the Divide between Rebatable and Non-Rebatable Cardiac Magnetic Resonance Scans?

Cardiac magnetic resonance (CMR) is increasingly referenced in guidelines from the American Heart Association and American College of Cardiology (AHA/ACC) and the European Society of Cardiology (ESC). However, Medicare Rebate Scheme (MBS) eligibility remains limited. We aimed to compare the difference between 1) strength of guideline recommendations and 2) level of evidence between MBS rebatable and non-rebatable scans. Keyword searching for CMR of all ESC and ACC guidelines was performed. CMR requests from a Western Sydney tertiary hospital from Feb/2018 to Feb/2020 were assessed as either a) as per ACC/ESC recommendations (≥level IIa) or as per current evidence (≥level B). Only guidelines explicitly specifying CMR were included. MBS rebatable and non-rebatable studies were then compared using Chi-Sq analysis. A total of 144 CMR requests (83:61 male:female) were assessed, 114 (78.5%) of which met ACC/ESC CMR use guidelines. However, only 19 (13.5%) were MBS rebatable, with 9 (47.3%) of these meeting ACC/ESC guidelines. Level of recommendation ≥IIa was found in 64% of non-rebatable and 42% of rebatable scans (p=0.059). The proportion of level of evidence ≥level B was similar between rebatable (15.4%) and non-rebatable (10.6%) scans (p=0.40). Our data demonstrate that non-rebatable scans tend to have higher level of recommendation as per guidelines with a result approaching statistical significance. There was no difference in level of evidence between rebatable and non-rebatable scans. A nation-wide study is needed to inform funding models for CMR which are guided by best evidence and levels of recommendation.

Reinforcement Learning for Optimal Market Making with the Presence of Rebate

We propose a reinforcement learning (RL) framework to solve the HJB equations of optimal market making with the presence of rebate. As a numerical solution, the RL algorithm successfully mirrors the analytical solutions under the scheme of no rebate and constant rebate. Under the time-dependent rebate scheme, there is no closed form and RL provides a plausible solution. We investigate the numerical performance of the RL solutions in simulations, which show that the RL solutions deliver stable accuracy in various situations and are robust to estimation errors. Moreover, the RL solutions demonstrate the impact of rebate on the behaviour of market makers (MMs) and the quality of market. In particular, the presence of a rebate stimulates MM to quote with narrower spreads on both sides of order books and the rebate is fully transferred to the end customers, which is consistent with the theoretical results in the analytical solutions. It also improves market quality by increasing the total trading volume and providing more terminal wealth to MMs. Finally, the time-dependent rebate scheme is found to be more cost efficient than a constant rebate.

The Devil is in the Tiers

Drug prices are widely recognized to be out of control for the American healthcare system. One crucial aspect for containing prescription drug costs is the insurance formulary tier system, which is supposed to incentivize consumers to prefer less expensive drugs by charging lower copays. When health insurers place drugs on preferred tiers, patients have lower cost-sharing burdens; when health insurers place drugs on less-preferred tiers, the patient’s burden is higher. In prioritizing certain drugs over others, the tiering system drives utilization, consumer choice, and the cost of drugs for individuals. This paper empirically demonstrates the formulary tier system is not working as designed with the number of drugs placed on inappropriate tiers increasing from 43% in 2010 to 65% in 2015. Generally generics are losing out by being placed on less competitive tiers with the percentage of generics on the most competitive tier decreasing from 73% in 2010 to 31% in 2015. Over this six year period, the dysfunctional formulary system cost society, conservatively, $15.5 billion. The trends seem to be getting worse and costing individuals and society more each year. To fix the formulary system, this paper suggests basing tiers on drugs’ list price, thereby simplifying and clarifying the currently opaque system. Making list price determine tier placement would decrease the prevalence of the incentive-distorting rebate schemes while recognizing that many people, unfortunately, do already pay the full list price.

Challenges facing Australian counselling psychologists: A qualitative analysis

ObjectiveIn the last decade, Australian counselling psychologists have seen a decline in the profession as academic programs close and their professional identity diminishes. In 2006, the Federal Government introduced the Better Access mental health initiative, which provides Medicare (Australia's national public health insurance scheme) funding for the community to access psychological services. While the Better Access initiative has been successful for consumers, it has created significant tensions within the psychology profession, offering higher rebates for services offered by a clinical psychologist. The literature highlights that the Better Access system has placed counselling psychology in a vulnerable position. Is this the only threat to the profession? This study sought to establish what Australian counselling psychologists perceive as the challenges facing the profession.MethodA web‐based survey was distributed to Australian counselling psychologists seeking information on a range of demographic and professional characteristics. The survey collected information on various aspects of professional identity and practice. Respondents were asked to identify what they see as the challenges facing counselling psychology.ResultsThe main challenges highlighted were related to inequalities in rebate schemes between clinical and counselling psychologists, ingrained biases towards clinical psychology resulting in power imbalances, divides, and in‐fighting within the profession, difficulties demarcating the unique identity of counselling psychologists (both from within and outside), and changes threatening the existence of counselling psychology as a viable training pathway in Australia.ConclusionThis paper explores the current challenges to the profession, recommendations for change at the individual and system levels, and directions for the future of the profession.

Fiscal stimulus and debt burden: evidence from Thailand’s first-car-buyer tax rebate program

This paper examines the extent to which a fiscal stimulus involving durable goods induces financial distress and causes debt burden. Using account-level loan data to study the impact of Thailand’s first-car-buyer tax rebate scheme at both individual and postcode levels, we find that the program led to higher loan delinquency and crowded out other loan originations, which are symptoms implied by excessive debt burden. The adverse impacts were more pronounced for passenger car buyers than for truck buyers and there were local negative spillovers to non-participants. Our findings raise questions about the merit of promoting economic growth by inducing debt-fueled spending and suggest that the design of durable goods stimulus policy should focus more on productive business durables than on consumer durables.

Techno-Economic and Sensitivity Analysis of Rainwater Harvesting System as Alternative Water Source

This paper formulates a rainwater harvesting model, with system and economic measures to determine the feasibility of a rainwater harvesting system, which uses water from the mains to complement the system. Although local meteorological and market data were used to demonstrate the model, it can also be easily adapted for analysis of other localities. Analysis has shown that an optimum tank size exists, which minimizes the cost per unit volume of water. Economic performance measures have indicated that rainwater harvesting system is currently infeasible to be implemented in Brunei; with capital cost and water price being shown to be among the prohibiting factors. To improve feasibility, a combination of rebate scheme on capital cost and raising the current water price has been proposed. It has also been shown that the system is more viable for households with high water demand.

Mothers at Work: The Fiscal Implications of the Proposed Ontario Childcare Rebate

January 10, 2019 — The Ontario government's proposed childcare rebate will offer working mothers relief and create a windfall of tax revenues for the federal government, according to a new report from the C.D. Howe Institute. In “Mothers at Work: The Fiscal Implications of the Proposed Ontario Childcare Rebate” authors Jacob Kim and Alexandre Laurin find that the proposed program would induce more Ontario mothers to take on employment and thus increasing tax revenues for both the Ontario and federal governments. “The fiscal gains from increased employment would reduce the net cost of the proposed rebate to about $590 million over the long term in Ontario” says Laurin. However, the federal government, which would take no part in the program but would also benefit from more mothers in the workforce, would rake in a windfall fiscal gain of $1.1 billion per year in the long term.” The newly elected government in Ontario pledged in its electoral platform to implement a childcare rebate program, which would reimburse up to 75 percent of the childcare expenses of low-income families, with the childcare subsidy rate gradually declining as family income grows. This study examines the fiscal implications of the proposed tax rebate. At first, the fiscal cost of the proposed rebate would be, at most, $945 million per year. Then, we expect the proposed rebate to induce some mothers of young children — whose decisions to take on paid work are sensitive to childcare costs — to enter the workforce. Over the long run, as many as 112,787 additionally employed mothers would generate extra fiscal revenues for the Ontario government, reducing the net fiscal cost by about 38 percent, to $588 million annually. Furthermore, the employment gain would create a large fiscal windfall for the federal government — perhaps as much as $1.1 billion per year over the long run — exceeding by far the net provincial cost of the program. Unless the federal government is prepared to transfer these prospective increased revenues back to Ontario in support of childcare, “it appears the federal government may actually be better fiscally positioned to implement such a childcare rebate scheme, rather than the Ontario government,” says Laurin.

The role of positive word of mouth on the success of convenience store loyalty programs

Customer loyalty programs are designed to create, develop, and preserve customer loyalty. The cost benefits, cash back, rebate schemes, and discounts encourage customers to purchase products that they might not otherwise buy. This study examines how far customer satisfaction with customer loyalty programs effects the spread of 'positive word of mouth' and how that impacts business at convenience stores. Numerous consumer shopping behaviours impact the customer loyalty programs that are developed by convenience stores. These include frequency of trips to the store, distance that is travelled, price sensitivity, commitment, and word of mouth of the store's customers. Potential customers actively seek information from other customers. Positive customer feedback for a product or retail store starts by positive word of mouth transferred by a customer to close family members and friends. Any positive, or negative, feedback runs throughout the specific community. Positive word of mouth is the only customer relationship marketing tool that requires no financial investment to attract new customers or retain existing ones.

The role of positive word of mouth on the success of convenience store loyalty programs

Customer loyalty programs are designed to create, develop, and preserve customer loyalty. The cost benefits, cash back, rebate schemes, and discounts encourage customers to purchase products that they might not otherwise buy. This study examines how far customer satisfaction with customer loyalty programs effects the spread of 'positive word of mouth' and how that impacts business at convenience stores. Numerous consumer shopping behaviours impact the customer loyalty programs that are developed by convenience stores. These include frequency of trips to the store, distance that is travelled, price sensitivity, commitment, and word of mouth of the store's customers. Potential customers actively seek information from other customers. Positive customer feedback for a product or retail store starts by positive word of mouth transferred by a customer to close family members and friends. Any positive, or negative, feedback runs throughout the specific community. Positive word of mouth is the only customer relationship marketing tool that requires no financial investment to attract new customers or retain existing ones.

Targeting with machine learning: An application to a tax rebate program in Italy

This paper shows how machine learning (ML) methods can be used to improve the effectiveness of public schemes and inform policy decisions. Focusing on a massive tax rebate scheme introduced in Italy in 2014, it shows that the effectiveness of the program would have significantly increased if the beneficiaries had been selected according to a transparent and easily interpretable ML algorithm. Then, some issues in estimating and using ML for the actual implementation of public policies, such as transparency and accountability, are critically discussed.

Economic Success in East Asia and in Hong Kong

This study is concerned with the organizational characteristics of Hong Kong’s manufacturing firms, the business and technology strategies they adopt. Before turning to those issues, it is useful to set the study in its broad setting, which is East Asian economic development. The purpose of this paper is to set out that broad setting, focusing on the explanations put forward for Hong Kong and East Asia’s economic success. Particular attention is paid to the role of technology in economic development, to the technology policies adopted by governments and to the means by which East Asian firms have developed their technological capabilities. The paper also shows that Hong Kong Special Administrative Government (HKSAR) has taken a different route to development than other East Asian economies, which may have implications for its great change in policies to support R&D through the Research and Development Cash Rebate Scheme. Under the scheme, a company will receive a cash rebate equivalent to 40% of its expenditure in R&D Projects.