Many important issues in business-to-business markets involve price discrimination and negotiated prices, situations where theoretical predictions are ambiguous. This paper uses new panel data on buyer-supplier transfers and a structural model to empirically analyze bargaining and price discrimination in a medical device market. While many phenomena that restrict different prices to different buyers are suggested as ways to decrease hospital costs (e.g., mergers, group purchasing organizations, and transparency), I find that: (i) more uniform pricing works against hospitals by softening competition; and (ii) results depend ultimately on a previously unexplored bargaining effect.

We study the impact of regulating product entry and quality information requirements on an oligopoly equilibrium and consumer welfare. Product testing can reduce consumer uncertainty, but also increase entry costs and delay entry. Using variation between EU and US medical device regulations, we document patterns consistent with valuable learning from more stringent US requirements. To derive welfare implications, we pair the data with a model of supply, demand, and testing regulation. US policy is indistinguishable from the policy that maximizes total surplus in our estimated model, while the European Union could benefit from more testing. “Post-market surveillance” could further increase surplus.

Using data on hospitals’ purchases across a large number of important product categories, we find that access to information on purchasing by peer hospitals leads to reductions in the prices hospitals negotiate for supplies. These effects are concentrated among hospitals previously paying relatively high prices for brands purchased in large volumes. Evidence from coronary stents suggests that transparency allows hospitals to resolve asymmetric information problems, but savings are limited in part by the stickiness of contracts in business-to-business settings. Savings are largest for physician preference items, where high-price, high-quantity hospital-brand combinations average 3.9% savings, versus 1.6% for commodities.

We study how firms target and influence expert intermediaries. In our context, pharmaceutical manufacturers provide payments to physicians during promotional interactions. We develop an identification strategy based on plausibly exogenous variation in payments driven by differential exposure to spillovers from AMC CoI policies. Using a case study of an important class of cardiovascular drugs, we estimate heterogeneous effects of payments on prescribing, with firms targeting highly responsive physicians. We also develop a model of supply and demand, which allows us to quantify how oligopoly prices reduce drug prescribing, and how payments move prescribing closer to the optimal level, but at great financial cost. In our estimated model, whether consumers are harmed by payments depends on whether there is substantial under-prescribing due to behavioural or other frictions. In a final exercise, we calibrate such frictions using clinical data and estimate that payments benefit consumers in this case study.