Strong Price Research Articles

Cheaper is not always better: Drug shortages in the United States and a value-based solution to alleviate them.

Drug shortages threaten patients' access to medications and are associated with adverse health outcomes and increased costs. Drug shortages disproportionately occur among generic drugs of limited profitability, most notably drugs administered by injection. In this perspective, we discuss how reimbursement and purchasing practices that were meant to create an efficient marketplace for generics have generated strong price pressure that threatens profitability in certain markets. We further explain how, faced with limited profitability, manufacturers lack incentives to invest in resilient supply chains, and in some cases, engage in cost-containment strategies or decide to exit the market, ultimately contributing to shortages. We propose the development and implementation of value-based reimbursement to provide needed incentives for drug purchasers and manufacturers to establish a more reliable supply chain as part of the policy solution to reduce the number and extent of drug shortages. This reimbursement model would necessitate the development of a rating system that measures supply chain resilience and maturity for each generic product. This rating would then be applied as a value-based modifier to reimbursement rates for generic products. The proposed model would result in higher reimbursement rates for generic products from more dependable supply chains, generating incentives for manufacturers to invest in supply chain resiliency. We propose the application of this reimbursement system originally in Medicare given Congressional interest on reforming Medicare payment to prevent drug shortages.

Revitalizing agricultural price mechanisms: A review and call for enhancement

Abstract Indian agriculture has long faced criticism for its lack of a strong price policy, which leaves farmers at the mercy of changes in the market. Although it has been implemented for a few commodities, the minimum support price (MSP) system has not been all-encompassing nor has the implementation of market intervention measures yielded much respite. This study makes the case that a thoughtful combination of the private investments and market intervention schemes (MIS) along with existing regimes of MSP could provide greater results. A strategy like this might offer farmers greater all-encompassing assistance while guaranteeing reasonable prices and stable markets. This study has reviewed two key existing frameworks by examining their strengths and flaws. Based on this analysis, it is possible to move forward by incorporating the best aspects of MIS and MSP. In addition to addressing the long-standing issues Indian farmers confront, this strategy could result in a more egalitarian and sustainable agriculture industry.

Estimating preferences and willingness to pay for pharmacogenetic testing in populations who are medically underserved: a discrete choice experiment.

Background: The implementation of pharmacogenetic (PGx) testing may contribute to health disparities if access to testing is inequitable, as medically underserved patients are prescribed higher rates of drugs with PGx guidelines and often experience the benefits of emerging health technologies last. Limited research has evaluated potential implementation of PGx testing in populations who are medically underserved and none have evaluated their preferences regarding PGx test characteristics and cost. Our study endeavored to assess the willingness to pay for PGx testing and key PGx test preferences in a nationwide cohort of medically underserved respondents. Methods: A survey was developed to assess willingness to pay and preferences for PGx testing through a discrete choice experiment (DCE). Five attributes of PGx tests were included in the DCE: doctor recommendation, wait time, number of actionable results, benefit of the test (avoid a side effect or address a health problem), and out-of-pocket cost. A convenience sample of U.S. adults with an average yearly household income of $42,000 or less was collected utilizing an online survey fielded by Qualtrics Research Services (Provo, UT). For the DCE analysis, conditional logit and mixed-logit regression models were utilized to determine relative utility of attributes and levels, conditional relative importance for each attribute, and marginal willingness to pay. Results: Respondents completed the survey with an 83.1% response completion rate. Following quality control procedures, 1,060 respondents were included in the final nationwide cohort. Approximately, 82% of respondents were willing to pay less than $100 for PGx testing, and a strong price ceiling was identified at $200. Out-of-pocket cost was the attribute identified as having the greatest relative importance on choice, while wait time had the lowest importance. Greater utility was observed if the PGx test was doctor recommended, had a higher number of actionable results, and resolved major or minor health problems compared with avoiding side effects. Conclusion: This first-of-its-kind study provides important insights into the willingness to pay for PGx testing and PGx test preferences of a large medically underserved population. Applying these findings can potentially lead to improvements in the successful implementation of PGx testing in this population.

Hedonic Analysis of Dried Pasta Prices Using E-Commerce Data-An Explorative Study.

Italy is the world leader in the production of pasta and the Italian market is characterized by strong price competition among large industrial producers. Thus, recently, many small and medium firms have started to differentiate their products as a way to achieve higher margins and escape from price competition. Using data on the prices and characteristics of dried pasta sold online in the Italian market and a hedonic price model, we estimated the implicit prices associated with several attributes that are currently available for dried pasta. We find that the "artisanal" statement on pasta labeling is associated with the highest price premium. Also, results show that protected geographical indication, Halal and Kosher certifications, and the use of ancient wheat varieties are valuable features of dried pasta sold in the Italian market. Instead, a positive, albeit limited in magnitude, price premium is associated with dried pasta made using 100% Italian durum wheat semolina, the organic method, enriched with additional ingredients. Findings suggest that producers can differentiate their products by mostly emphasizing their small-scale production methods, the territorial connotation, and the cultural and environmental sustainability of production. Otherwise, certifying dried pasta as Halal or Kosher can represent a complementary or alternative strategy to differentiate the product and achieve a higher price.

Who's afraid of a Texas hedge?

There is anecdotal evidence of hedgers taking speculative positions using futures contracts—so-called “Texas hedges”—but the literature provides little guidance on this phenomenon. The paper explores the conditions under which “Texas hedges” may be optimal within the standard risk management framework. Using an empirical setting of multi-commodity hedging, we find that (1) “Texas hedges” do not occur when hedges are optimized individually (single-commodity hedging), (2) neither do they occur when the hedger's objective is to minimize variance, but (3) they do occur 18% of the time in a multi-commodity framework under a downside risk minimization objective (i.e., LPM2), which is closer to what hedgers actually do. Furthermore, (4) “Texas hedges” arise following periods of strong price momentum. This can be explained by downside risk-averse hedgers being concerned only about one side of the distribution. Therefore, expected favorable price movements are not treated as risk, but rather as a profit-enhancing opportunity.

Market Integration among Major Wheat Markets in India

The study is based on secondary data which tests the price movement and integration between major national wheat markets i.e. Lakhimpur, Agra, Vidisha, Dewas, Kota and Baran markets. Monthly wheat prices data of 15 years from 2007-08 to 2021-22 which was collected from www.agmarknet.gov.in. To analyze the market integration among major wheat markets, the Augmented Dickey-Fuller test, Johansen Co-integration test and Granger Causality test were applied with the help of E-views statistical package. The results indicated the strong market integration in terms of price linkages among major wheat markets. The results revealed that the major markets of wheat have strong price linkages and thus are spatially integrated. It could be seen that existence of mostly (10) unidirectional causality with few (3) bidirectional causality among selected wheat markets. It was further revealed from the analysis that, any disturbance in price will get corrected in about 5 days in Lakhimpur market, 3 days in Agra market and 3 days in Kota market in short-run equilibrium. The transfer of price signals from one market to another helps in stabilizing the prices over space and create a healthy competitive environment. This would also help to protect the interest of producer-sellers. In order to achieve the goal of integration, the government should strengthen the market intelligence and communication within markets. The following study recommendations were made: a) Government should subsidize provide is transportation. b) Government and stakeholder should advise commercial banks to give low interest long-term loans to farmers because many impoverished farmers can't afford crop mechanization. c) Government and other i.e, NGO advertising should be increased to raise knowledge about improved agricultural machinery. d) Government and other i.e, NGO should educate farmers. Farmers can employ technology if they are trained and educated. They should also be told how much fertilizer to use so it yields more.

Distributed Renewable Energy Investment: The Effect of Time-of-Use Pricing

This paper examines the effects of time-of-use (TOU) pricing on distributed renewable energy (DRE) investment for a non-power generating firm. We develop an electricity consumption cost-minimization model by considering the intermittent generation as well as the firm’s electricity consumption. It has been found that implementing full retail prices compensation for the surplus renewable electricity is probably not good as it may lead to DRE over-investment. Moreover, we find that the firm’s optimal investment strategy is not necessarily sensitive to the price signal of TOU pricing (i.e., the ratio of peak to off-peak price). Particularly, when the service-level difference in meeting a firm’s electricity consumption between peak and off-peak periods by adopting DRE technology is above a critical threshold in relation to the peak time, a strong price signal will not promote the firm’s optimal DRE capacity investment. This paper yields a policy insight that “getting the time right” may be more important than “getting the price right” in terms of enabling DRE investment for TOU pricing design.

Near-Optimal and Collaborative Service Caching in Mobile Edge Clouds

In this paper, we study the problem of service caching in an MEC network under a service market with multiple network service providers competing for both computation and bandwidth resources in terms of Virtual Machines (VMs) in the MEC network. We first propose an Integer Linear Program (ILP) solution and a randomized rounding algorithm, for the problem without VM sharing among different network service providers. We then devise a distributed and stable game-theoretical mechanism for the problem with VM sharing among network service providers, with the aim to minimize the social cost of all network service providers, through introducing a novel cost sharing model and a coalition formation game. We also analyze the performance guarantee of the proposed mechanism, Strong Price of Anarchy (SPoA). We thirdly consider the cost- and delay-sensitive service caching problem with temporal VM sharing, and propose a mechanism with provable SPoA. We finally evaluate the performance through extensive simulations and a real world test-bed implementation. Experimental results demonstrate that the proposed algorithms outperform existing approaches by achieving at least 40% lower social cost via service caching and resource sharing among different network service providers.

Out-of-season spawning of largemouth bass in a controllable recirculating system.

Largemouth bass (LMB) production exceeded 0.7 million tons in 2021 and has become one of the most important freshwater aquaculture species in China. The stable and fixed culture cycle led to regular and drastic price fluctuation during the past decade. Strong price fluctuation provides opportunities and challenges for the LMB industry, and out-of-season spawning (OSS) and culture will provide technical support for the opportunities. To induce OSS at a low cost, we established a controllable recirculating system that allows precise thermo-photoperiod manipulation. In the system, four experimental groups were assigned, 18NP (18°C overwintering water temperature, natural photoperiod), 18CP (18°C overwintering water temperature, controlled photoperiod), 16CP (16°C overwintering water temperature, controlled photoperiod), and NTNP (natural water temperature and natural photoperiod), to determine the effects of chilling temperature and photoperiod on spawning performance. OSS was observed in all the experimental groups without significant differences, except NTNP. The manipulated broodstock can re-spawn 3months later in the next spring in advance. Further analysis of the volume percentage of different stages of oocytes provides a base for excellent regression between the volume percentage of the primary growth stage, cortical alveoli stage, vitellogenesis/maturation stage, and gonadal development/maturation. The results suggest that the volume percentage of oocytes is a better indicator of gonadal development and maturation than the gonadosomatic index. We also found that LMB prefers palm fiber as a spawning nest over gravel. The findings of this work provide important technique guidance for practical OSS of the LMB aquaculture industry and standardization of ovary development and maturation in fish with asynchronous developmental oocytes.

Nothing Compares? Investigating the Cost of Food as a Driver of Urban Unrest

Increasing food prices have implications for basic subsistence, have a strong price visibility and symbolic value, and are characterized by high volatility and inelasticity of demand. Research thus assumes that food price is an important trigger for unrest. Yet, whether food is an especially potent driver for people’s willingness to engage in collective action, or whether it concerns grievances about general inflation, is unknown. Does food have a greater effect on the willingness to participate in unrest? The paper investigates the relative importance of food in mobilization potential by using unique data from a survey experiment in Johannesburg, South Africa. The experiment collects information on how price increases in food, fuel, and electricity affects respondents’ willingness to engage in unrest. The results show a higher willingness to engage in collective action when presented with increasing living expenses, regardless of whether it is food, fuel or electricity, compared to stable prices. We also consider the level of risk exposure to price hikes, and find that those who report going hungry in the last year have a higher willingness to engage in unrest than those who do not. Thus, food access influences the willingness to partake in unrest during price hikes, also for commodities seemingly unrelated to food. This suggests that for those who are most affected by a price hike it is less important what type of commodity it is. The question is whether it introduces further strain on an already hard-stretched budget.

Exploring the pattern of price interdependence in rice market in Indonesia in the presence of quality differential

Being the main food commodity, the dynamics of rice prices is one of the most important issues for Indonesian economy. The prices at the retail level and at the farm level are influenced not only by the demand and supply in each of these markets but also by price behavior at the wholesale market. This study aims to analyse the dynamics of the relationship and behaviour of the prices of various varieties and qualities of rice in the wholesale market. The dynamics of rice prices are investigated by employing multivariate vector error correction model (VECM) and using daily price series at wholesale level during the period of 1 October 2014 until 12 February 2018. The results show a strong price relationship between premium-quality rice and medium-quality rice and between medium-quality rice and low-quality rice. Changes in the price of premium-quality rice and changes in the price of low-quality rice will have a large influence on the price of medium quality rice, but not vice versa. Furthermore, regarding the price stabilization policy, the results suggested that the policies aimed at regulating medium-quality rice prices are estimated to have relatively weak effects on the prices of premium-quality rice and low-quality rice.

Impacts of COVID-19 on U.S. Seafood Availability

Abstract Seafood is the food group with the highest share traded, and the U.S. is the world’s largest seafood importer, importing 79% of the seafood consumed. Hence, a study examining the impacts of the measures to contain COVID-19 on U.S. seafood imports will not only show how U.S. seafood availability has been affected, but will also give strong indications of how resiliently the global seafood markets have worked through the pandemic. We find that U.S. imports of seafood actually increased in 2020 and 2021, suggesting supply chains were able to adapt to potential disruptions. Moreover, for the 14 largest product forms imported to the U.S., there are no strong price movements. Given that there is a global market for most species groups, this adaption also suggests that the markets have worked quite well beyond the U.S. Hence, while there have undoubtedly been market shocks associated with the COVID-19 measures such as the reduction in demand from the restaurant sector and the increased sales in the retail sector, opportunities seem to balance out challenges, and the supply chains for seafood to the U.S. have been highly resilient.

AkzoNobel revenue up 19% due to strong pricing, despite increased macro-economic headwinds

AkzoNobel revenue up 19% due to strong pricing, despite increased macro-economic headwinds

Is adding ribociclib to fulvestrant cost-effective in treating postmenopausal women with HR+/HER2- advanced or metastatic breast cancer? A US payer perspective cost utility analysis.

BACKGROUND: Breast cancer is the most prevalent type of cancer in women in the United States. Ribociclib plus fulvestrant combination therapy gained US Food and Drug Administration approval to treat postmenopausal women with hormone receptor-positive/human epidermal growth factor receptor 2-negative (HR+/HER2-) advanced or metastatic breast cancer in 2018. OBJECTIVE: To determine the cost-effectiveness of ribociclib plus fulvestrant vs placebo plus fulvestrant therapy in the target population from a US payer perspective. METHODS: A partitioned survival analysis model composed of 3 health states (progression free, progressed disease, and death) was constructed to evaluate the cost-effectiveness of ribociclib plus fulvestrant vs placebo plus fulvestrant. The progression-free survival and the overall survival data points were extracted from published Kaplan-Meier curves in the MONALEESA-3 study and fitted to parametric curves. The safety and efficacy of the treatment was referenced from the MONALEESA-3 trial. Costs were obtained from standard sources including the Red Book for medication costs, Medicare Clinical Laboratory/Physician Fee Schedule for clinical utilization, and the literature for costs of managing adverse events, subsequent therapy, and end-of-life care. Utility and disutility values were obtained from literature to calculate quality-adjusted life-years (QALYs). One-way and probabilistic sensitivity analyses were conducted to test the model robustness. Several scenario analyses were also investigated. RESULTS: In the base case, the ribociclib plus fulvestrant arm was associated with $522,844 and 3.25 QALYs compared with $50,395 and 2.14 QALYs in the placebo plus fulvestrant arm, leading to an incremental cost-effectiveness ratio of $425,951/QALY. The cost of ribociclib had the biggest impact on the model and constituted 84% of the total cost for the ribociclib plus fulvestrant arm. The probabilistic sensitivity analysis projected that the ribociclib plus fulvestrant treatment would have a net benefit over the placebo plus fulvestrant therapy at a willingness-to-pay (WTP) threshold of $405,600/QALY. CONCLUSIONS: At a WTP threshold of $150,000/QALY, the addition of ribociclib to fulvestrant is not considered to be cost-effective in postmenopausal women with HR+/HER2- advanced or metastatic breast cancer. The findings send a strong price signal to the manufacturer and can be used to facilitate payers with price negotiation in making coverage decisions.

Quantile price convergence and spillover effects among Bitcoin, Fintech, and artificial intelligence stocks

AbstractThis research explores the distributional and directional predictabilities among Fintech, Bitcoin, and artificial intelligence stocks from March 2018 to January 2021 using nonparametric causality‐in‐quantile and crossquantilogram approaches. We also examine connectedness across the assets using a quantile VAR approach. The results indicate the existence of bidirectional causality‐in‐variance between the variables in a normal market. We also find that directional predictability among the assets is oscillatory over time lags. Finally, we observe a strong price connectedness for highly positive and negative changes. These results further document the diversification potential and safe‐haven properties of technology‐related assets for portfolio investors.

Persistence and volatility spillovers of bitcoin price to gold and silver prices

The paper investigates persistence, returns and volatility spillovers from the bitcoin market to the gold and silver markets using daily datasets from January 2, 2018 to July 31, 2020 by employing the fractional persistence framework. The results show strong price persistence with bitcoin posing the highest volatility persistence, while silver poses the lowest volatility persistence. The results of multivariate GARCH modelling, using the CCC-VARMA-GARCH model and other lower variants indicate the impossibility of returns spillover between the bitcoin and gold (or silver) market, while there exist bi-directional volatility spillovers. Appropriate portfolio management and hedging strategies render towards the end of the paper require more gold and silver investments in the portfolio of bitcoin to fully have the diversification advantage and reduce risk to the minimum without reducing the expected returns of their portfolio.

Toward energy finance market transition: Does China’s oil futures shake up global spots market?

China is breaking through the petrodollar system, establishing RMB-dominating crude oil futures market. The country is achieving a milestone in its transition to energy finance market internationalization. This study explores the price leadership of China’s crude oil futures and identifies its price co-movement to uncover whether it truly shakes up the global oil spots market. First, we find that for oil spots under different gravities, China’s oil futures is only a net price information receiver from light-, medium-, and heavy-gravity oil spots, but it has a relatively stronger price co-movement with these three spots. Second, for oil spots under different sulfur contents, China’s oil futures still has weak price leadership in sweet, neutral, and sour oil spots, but it has strong co-movement with them. Third, for oil spots under different geographical origins, China’s oil futures shows price leadership in East Asian and Australian oil spots at the medium- and longrun time scales and strong price co-movement with East Asian, Middle Eastern, Latin American and Australian oil spots. China’s oil futures may not have good price leadership in global spots market, but it features favorable price co-movement.

Social media and money: How our tweets affect the financial markets

Social media, such as Twitter, has replaced traditional media as a dominant information source (Gan et al., 2020). With social media being a fast and more efficient information dissemination channel, investors can quickly access, update and exchange stock-related information before making trading decisions. In this study, I examine the mechanism by which social media sentiment affects stock prices. I first collect a sample of 2.2 million tweets and quantify each tweet using Natural Language Processing (NLP) techniques to infer whether the tweet has a positive or negative tone. Next, I employ a modified vector autoregression (VAR) model to assess the impact of tweets on stock returns at the minute frequency. I find that Twitter sentiment affects stock prices through its impact on trades. Trades have stronger price impacts with an increase in tweet volume or investor sentiment. In addition, both bullish and bearish tweets amplify the impact of trades on stock returns. Twitter sentiment causes a permanent price movement until a new equilibrium is reached, showing Twitter sentiment contains substantial information to drive stock prices. These findings suggest that trades in the stock market become more informative as tweet activity increases, as well as when tweets contain higher sentiment. To the best of my knowledge, this is the first study looking at the exact mechanism of how social media affects the stock market and investors' response behaviour.

Strategic Trade Credit in a Supply Chain with Buyer Competition

Problem definition: In practice, trade credit (TC) is often offered in a contract that stipulates a single, fixed interest, rather than an interest menu contingent on the loan amount. We examine why a supplier uses such a single-interest contract and why a buyer who can access perfect external capital (EC) with contingent interest may use TC, when the supplier does not share the buyer’s demand risk. Methodology/results: We solve a dynamic game between a supplier and two buyers, who have access to EC and compete in a Cournot game in the product market. We show that the single-interest contract incentivizes a buyer to order more. Thus, such a contract benefits the supplier and makes TC a strategic device for buyers to commit to competing aggressively. Opposite to well-known results, we show that buyers may benefit from using strategic TC, because their access to EC gives them strong pricing power that yields sufficiently low wholesale price. The entire supply chain also benefits because the over-ordering distortion under TC mitigates the under-ordering problem caused by double marginalization. Managerial implications: Our analysis implies that, to weaken buyers’ pricing power and improve profit, the supplier should offer cheap TC—for example, in net terms to—financially resourceful buyers and expensive TC—for example, with early payment discount—to financially constrained buyers, as observed in practice. We find strategic TC to yield increasingly more benefit for the supplier as its production cost decreases and may allow the buyer to maximize its payoff at an intermediate consumers’ willingness-to-pay that leads to strong pricing power and low wholesale price.

Time-varying spillovers among pilot carbon emission trading markets in China.

Clarifying the time-varying spillovers among pilot carbon emission permit trading markets in China is an important foundation for building the national carbon emission trading market. We calculate the dynamic spillover of carbon price return among the pilot carbon emission permit trading markets in China with the time-varying connectedness approach. The dataset is constructed from transaction data from seven pilot carbon markets in China during the period of June 23, 2014, to December 31, 2020. The quantitative analysis suggests that (i) Beijing and Chongqing carbon emission trading markets are the main spillover markets of carbon price returns, with strong pricing power, while the Guangdong and Tianjin markets are the main receivers of the price return spillover in other pilot carbon emission trading markets. (ii) The spillover effect among China’s carbon markets has a strong policy orientation. The improvement and development of the carbon market driven by macroeconomic regulation and control policies can effectively improve the spillover ability of the carbon market, and the market trading activity, namely the volatility of the carbon price return rate, can amplify the spillover ability of the carbon market in the short term. (iii) There exist three types of price return spillover among China’s pilot carbon emission trading markets, including central divergence, one-way chain transmission, and circular spillover. Along with the improvement of market operation efficiency, the central divergent type of spillover shifts to the pattern of circular spillover. It is necessary for the government to improve market efficiency and ensure the coordinated development of China’s pilot carbon emission trading market and national carbon emission trading market.Supplementary InformationThe online version contains supplementary material available at 10.1007/s11356-022-19914-4.