Johns Hopkins Carey Business School

Baltimore, MD, United States

Johns Hopkins Carey Business School

Baltimore, MD, United States

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News Article | May 10, 2017
Site: www.prweb.com

Westlake Health Mart Pharmacy, located in the Dallas Fort Worth area, is a new digital pharmacy that delivers medications to patients in 2 hours or less. Patients are always welcome to stop by the pharmacy’s physical location as well. Westlake Health Mart’s main goal is to provide medications in a timely manner, creating a convenient and stress-free service for patients in need. Westlake Health Mart Pharmacy was founded by Dr. Osita Najomo (Doctor of Pharmacy), a practicing pharmacist and an entrepreneur who has over 12 years of pharmaceutical healthcare industry experience, with a strong management focus in retail pharmacy and the health & beauty sector. Dr. Najomo graduated from the Texas Tech School of Pharmacy and received an MBA from the Johns Hopkins Carey Business School. She is the creator of SnapPrescriptN app, a digital tool that allows patients to communicate directly with their pharmacy. "I want to eliminate the drop-off and pick-up line because there is no reason for patients to stand in that line anymore in this digital age," said Dr. Najomo. She expressed how she felt sad when she saw sick patients line up to drop off or pick up their medications. Often times, mothers waited with crying babies, or patients using crutches still had to stand in line. Dr. Najomo wanted to create a seamless process in which doctors could send prescriptions to pharmacies, and patients could then pick up their medication at a time or place convenient for them. This desire inspired her to open up a digital pharmacy. Westlake Health Mart Pharmacy was funded by Austin Texas based PeopleFund company and is located at: 5421 Basswood Blvd, STE 700, Fort Worth, TX 76137 (Across the Texas health ER)


A Zika attack rate of just 1 percent across the six states most at risk for the mosquito-borne disease could result in $1.2 billion in medical costs and lost productivity, a new study finds. That’s more than the $1.1 billion in emergency Zika funding that Congress approved last year after months of delay and which is expected to run out this summer. “One of the troubling things last year was that (Zika funding) was viewed as a cost — every week, there was another delay and more people becoming infected and more chances of birth defects,” study co-author Bruce Y. Lee, an associate professor at Johns Hopkins University Bloomberg School of Public Health, told me. “The problem is that public health is viewed separately from the economy, even though keeping the population healthy is an investment that benefits the economy.” As soon as Zika virus emerged in Brazil in 2015, Lee and colleagues knew it was only a matter of time before the mosquito-borne virus made it to U.S. shores. So, they began building a computational model to estimate the economic burden that Zika could have on the U.S., with the hope that policymakers use the estimates when deciding how to prepare for and respond to the continuing disease threat. The forecasts of that computational model were published in late April in PLOS Neglected Tropical Diseases, reporting a potential economic burden of billions of dollars. To generate economic forecasts, researchers considered a variety of Zika scenarios across six particularly vulnerable states: Alabama, Georgia, Florida, Louisiana, Mississippi and Texas. Scenarios varied by the number of people infected (the “attack rate”) and took into account the probability of a pregnant woman becoming infected as well as the likelihood of infections leading to birth defects or Guillian-Barré syndrome. They also considered a number of potential costs, including testing pregnant women for Zika, treating and caring for children born with birth defects, as well as productivity losses. The scenarios took place over a Zika epidemic that spanned 230 days, which mirrored the outbreak duration that occurred in Brazil. Here’s what they found: Across the six states, an attack rate of 0.01 percent would cost society $183.4 million in direct medical costs and lost productivity. At attack rate of 0.025 percent would cost $198.6 million; a rate of .1 percent would cost $274.6 million; 1 percent would cost $1.2 billion; and 2 percent would top $2 billion. While U.S. Zika infection rates aren’t expected to reach levels seen in South America and the Caribbean, the researchers did offer this perspective: The attack rate of Zika in French Polynesia and that of chikungunya in Puerto Rico — a virus similar to Zika and spread by the same species of mosquito — is higher than 10 percent. The study also estimated that an attack rate of .05 percent would lead to 10 children born with microcephaly, a rate of .10 percent would lead to 20 cases, and a rate of .75 percent to 150 cases. An attack rate of 0.01 percent would lead to 770 outpatient visits for Zika-infected nonpregnant patients, more than 350,000 ultrasounds for pregnant women and at least one amniocentesis. Each 1 percent increase in the attack rate would result in about 3,500 additional medical screening visits. On medical costs, an attack rate of .05 percent across six states would mean $123.2 million in direct medical costs; a rate of .10 percent in $130.8 million; and a rate of .75 percent in $220.9 million. Part of the Zika-related health care costs would be paid through Medicaid as well. For instance, an attack rate of .05 percent in Louisiana would result in $2.6 million in Medicaid costs. In calculating productivity losses, Lee and colleagues considered time for additional screenings for pregnant women as well as lifetime productivity losses associated with birth defects and Guillian-Barré syndrome. Total productivity losses across the six states were more than $100 million for an attack rate of .05 percent and more than $700 million for a rate of .75 percent. Lee, who also serves as an associate professor in the Johns Hopkins Carey Business School, said a Zika outbreak could be particularly straining for the six vulnerable states studied, which include some of the poorest states in the nation with more limited resources available to respond to the disease. As the U.S. heads into mosquito season, state and local public health departments — the agencies on the frontlines of Zika prevention and response — face serious funding problems. At the federal level, an Affordable Care Act repeal, combined with severe budget cuts proposed in the White House budget plan, could significantly slash the budget at the Centers for Disease Control and Prevention. And many local health departments expect continued cuts to public health preparedness funds. According to news reports, CDC officials have cautioned public health departments to not expect new Zika funding after remaining funds run dry. Lee described the current funding situation as “incredibly short-sighted.” “(Zika) continues to spread silently, through mosquito populations and through people,” Lee said. “We really have no idea how many people are infected at this point.” According to CDC, as of May 9, more than 1,800 women in the U.S. have laboratory evidence of Zika virus. For a copy of the economic burden study, visit PLOS Neglected Tropical Diseases. Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for 15 years. Follow me on Twitter — @kkrisberg.


News Article | May 3, 2017
Site: www.eurekalert.org

UNIVERSITY OF CALIFORNIA, BERKELEY'S HAAS SCHOOL OF BUSINESS -- People may instinctively know right from wrong, but determining if someone has good moral character is not a black and white endeavor. According to new research by Berkeley-Haas Assoc. Prof. Clayton Critcher, people evaluate others' moral character -- being honest, principled, and virtuous -- not simply by their deeds, but also by the context that determines how such decisions are made. Furthermore, the research found that what differentiates the characteristics of moral character (from positive yet nonmoral attributes) is that such qualities are non-negotiable in social relationships. "Judgments about moral character are ultimately judgments about whether we trust and would be willing to invest in a person," says Critcher. Critcher, who studies social psychology in the Haas Marketing Group, writes about his findings in a recent book chapter, "What Do We Evaluate When We Evaluate Moral Character?" co-authored with Erik Helzer of the Johns Hopkins Carey Business School. The chapter will soon be published in the Atlas of Moral Psychology, from Guilford Press. But how do people detect whether good moral character is present? The findings suggest that people can do what is considered the wrong thing but actually be judged more moral for that decision. How? Imagine a social media company with access to its clients' personal information and interactions. The government wants access to the user database for terrorist surveillance purposes, but it is up to the CEO to decide whether to violate the company's privacy code. Is he considered a more moral person by complying with the request, or by refusing it? Critcher's work shows that even people who think the CEO should hand over the data to the government consider the CEO to have better moral character if he does the opposite and adheres to the privacy policy. "For the CEO who sticks to a moral rule -- even when we think a deviation could be justified -- we are more confident he will behave in sensible, principled ways in the future," says Critcher. In one experiment, Critcher asked 186 undergraduates to evaluate 40 positive personality traits by rating them on two dimensions: 1) how much each trait reflected moral character, and 2) whether the participants would or would not be willing to have a social relationship with someone who lacked that quality. "The two dimensions were correlated at .87, which means the two are almost the same thing. It is about the highest correlation I have ever seen in psychological research," Critcher says. "What makes moral traits special is that their absence is a deal breaker, even when compared to qualities that the participants deemed just as positive." But did people see these traits as essential because they were seen to be moral? The research team answered that question by leading people to construe the exact same trait as either moral or nonmoral. Research participants were shown 13 traits that the researchers deemed ambiguously moral (e.g., reasonable). Some participants were first exposed to traits that were clearly non-moral (e.g., imaginative); afterward, they found the ambiguous traits morally relevant. In contrast, other participants who first saw traits that were clearly moral (e.g., honorable) deemed the ambiguous traits as non-moral. Inducing people to see these 13 ambiguous qualities as more moral also caused them to deem these qualities as more essential for their social relationships. In short, participants considered good moral character to be synonymous with justifying a social investment. But here's the conundrum: If people don't want to invest in others who lack moral character, how do they ever learn whether new potential relationship partners have that requisite character? Perhaps people escape this dilemma by assuming the best about an individual's moral character until they learn otherwise. "When we first meet someone, we can directly observe their attractiveness, and a short conversation can reveal a lot about their basic social graces, but typically their moral character is not on direct display. In fact, learning if someone is trustworthy often requires us to trust them first," says Critcher. To that end, a third experiment revealed how optimism about an individual's moral character helps people avoid this conundrum. "When people first meet someone, they tend to give them the benefit of the doubt when it comes to morality. People don't start with the same optimism about their sense of humor, musical, or intellectual ability," says Critcher. "It's an adaptive optimism--one that encourages us to operate on enough faith that we can at least learn whether they are worthy of a social investment--until they prove us wrong."


News Article | December 2, 2016
Site: www.prweb.com

Battling an epidemic of opiate addiction, U.S. drug treatment facilities have made progress with methadone. A daily dose of at least 60 milligrams of methadone is recommended to achieve therapeutic effects and has been associated with improvements that include significant decreases in heroin use, in relapse rates, and in HIV incidence. Some patients of “opiate agonist treatment” facilities, however, receive less than 60 milligrams per day. A team of researchers led by a Johns Hopkins University expert on health care organizations examined differences in methadone dose levels and the role that program directors may play in accounting for these variations. For a study recently published in Health Services Research, the team discovered that, overall, the proportion of patients getting lower than the recommended daily dose of methadone for opiate addiction has declined in recent years. However, facilities run by African-American directors were more likely to provide low methadone doses than facilities run by managers of other races and ethnicities. This relationship was even stronger at facilities run by African-American directors serving a high proportion of African-American patients. Lead author Jemima A. Frimpong, an assistant professor at the Johns Hopkins Carey Business School in Baltimore, says the finding was unexpected. She and her co-authors ― doctoral candidate Karen Shiu-Yee of Columbia University and Professor Thomas D’Aunno of New York University ― set out to determine a possible link between the characteristics of facility managers and the lower doses of methadone. While manager race and ethnicity were conceptually relevant to the analysis, the specific finding regarding African-American managers was not anticipated, Frimpong explains. But its importance became apparent as the researchers examined data compiled from 1995 through 2011 in the National Drug Abuse Treatment System Survey (NDATSS). Frimpong and her colleagues suggest possible reasons for the lower methadone doses at facilities run by African-American directors ― for example, negative perceptions of methadone in the African-American community, and a preference among those directors for psychosocial treatment, including talk therapy, as a supplement to methadone in treating opiate addiction. The authors concede that further research is needed to better understand their finding regarding the relationship between the races of program managers and dosing patterns. “We know that the problem of low dosing exists, and research has looked at how patient characteristics may play a role,” says Frimpong. “Our study extends such analyses and examines characteristics of managers and how they may influence methadone dosing patterns in opioid treatment programs.” In that way, she says, this new paper helps advance the literature because it is among the first to examine the role of managers. The ultimate goal of such research, adds Frimpong, is to encourage more effective treatment practices for the growing scourge of opiate addiction. As the Centers for Disease Control and Prevention noted in January 2016, “The United States is experiencing an epidemic of drug overdose (poisoning) deaths. Since 2000, the rate of deaths from drug overdoses has increased 137 percent, including a 200 percent increase in the rate of overdose deaths involving opioids (opioid pain relievers and heroin).” Previously, the CDC reported that 259 million prescriptions for painkillers were written in 2012, enough to supply every American adult with a bottle of pills. “Because opiate addiction is increasing at such a disturbing rate,” Frimpong says, “it is important that treatment programs are adopting and implementing evidence-based practices. The available research suggests that too many persons with opiate addiction are not getting methadone dose levels shown to be effective.” According to the NDATSS, the percentage of patients getting less than 60 milligrams of methadone per day actually decreased over 16 years ― from 49 percent in 1995 to 23 percent in 2011. “That is definitely an improvement, but it also means that nearly a quarter of patients were not getting dose levels more likely to be effective. The magnitude of opiate addiction remains a big problem. Therefore, an 80-percent success rate is not adequate. We still have a lot of work to do in order to address the opioid epidemic,” says Frimpong, who earned her PhD at the University of Pennsylvania’s Wharton School of Business. Her research, as seen in this study, focuses on organizational factors and the extent to which they affect health care practices and outcomes. The paper, titled “The Role of Program Directors in Treatment Practices: The Case of Methadone Dose Patterns in U.S. Outpatient Opioid Agonist Treatment Programs,” appeared September 2016 on the website of Health Services Research and is forthcoming in the print version of that journal. The study was supported by research grants from the National Institute of Drug Abuse.


News Article | February 16, 2017
Site: www.prnewswire.com

TAMPA, Fla., Feb. 16, 2017 /PRNewswire-USNewswire/ -- AACSB International (AACSB) announces that the Johns Hopkins Carey Business School has earned accreditation. Founded in 1916, AACSB International is the longest serving global accrediting body for business schools that offer undergradua...


TAMPA, Fla., Feb. 16, 2017 /PRNewswire-USNewswire/ -- AACSB International (AACSB) announced today that Asia University-Taiwan (Chinese Taipei), ISC Paris (France), Johns Hopkins Carey Business School (United States), Soochow University (China), Universidad Carlos III de Madrid (Spain),...


News Article | December 8, 2016
Site: www.prweb.com

The road to perdition, the adage goes, is paved with good intentions. Similarly, many observers say the road to poor economic performance may be paved with well-meaning regulations. Count economist Ricard Gil of Johns Hopkins University among those offering that observation. In a new study for Economic Inquiry, Gil and co-author Fernanda Gutierrez-Navratil show that the deregulation of the once-constrained television industry in Spain set off a boom in TV viewing. This in turn led to a substantial decline in attendance and box office revenues at Spanish movie houses. “When governments take regulatory actions, they focus on the particular industry they’re trying to help. But often neighboring industries are affected in unintended negative ways. That’s a tradeoff that is rarely considered in advance by regulators,” says Gil, an associate professor at the Johns Hopkins Carey Business School. The deregulation of Spanish television began with a 1995 national law that allowed each town to have up to two local stations. In 2002, with a more conservative government in Madrid, deregulation was expanded so larger towns could have a station for every 250,000 inhabitants. The number of local stations throughout the country multiplied, many of them running TV programs about local culture, politics, and sports that attracted viewers who might otherwise have gone out to the movies. Between 1995 and 2002, movie attendance in Spain increased by 55 percent, thanks to a rise in the number of suburban multiplex cinemas. However, in the eight years following the 2002 deregulation, movie attendance fell by 30 percent. A clear correlation exists, the paper affirms, between the increase in small-screen viewing and the decrease in big-screen viewing among Spaniards during this period. Gil, who earned his doctorate in economics from the University of Chicago, says he views this study as a sort of cautionary tale for regulators at all levels of government, across all industries and policy areas. The paper warns starkly against “naïve implementation of regulation and policy that does not examine potential impact on neighboring industries.” From beyond the media world, Gil cites the example of subsidies designed to protect the price of soybean crops in Argentina. The upshot was that many meat producers became soybean farmers to cash in on the new policy. The supply of meat went down, the price went up, and fewer Argentines could afford one of their favorite foods. “Is that to say regulating the soybean industry in Argentina was a mistake? Not necessarily,” Gil explains. “It’s probably a good thing when you consider how many people are dependent on the soybean market. But the government clearly didn’t understand what the consequences of their policy would be. They didn’t give enough thought to the possibility that if you pay some people to do A, then other people will stop doing B to produce A and get paid as well.” Last April, the two co-authors presented their paper at a seminar for policy makers at the Federal Communications Commission in Washington, D.C. The findings found an appreciative audience there, says Gil: “These were people who write many of the policies and regulations of the FCC, and they told us they’re often pressured to work quickly in making recommendations. They’d like to take more time with their assessments, and the paper helped put across their point that these issues are never as simple as they look. More time is needed to consider a regulation’s potential repercussions.” He adds, “We’re not saying it’s easy to anticipate every possible impact. But regulators need to start thinking more about ‘If we take this step, what’s going to happen as a result?’” Further research could dig even more deeply into how regulations for one industry can affect another, Gil suggests. For instance, would the TV-related declines in movie attendance and box office receipts hinder the ability of studios to produce high-quality, engaging films? The study “Does Television Entry Decrease the Number of Movie Theaters?” received financial support from the Spanish Ministry of Economy and Competitiveness and the Basque Country Government. Gutierrez-Navratil served as a post-doctoral researcher in economics at the Carey Business School while working with Gil on the project. Besides having appeared online last month, the paper is forthcoming in the print edition of Economic Inquiry.


News Article | March 2, 2017
Site: www.prweb.com

When Stockholm, Sweden, introduced a “congestion tax” to discourage driving in the center of town, traffic eased and the pollution level dropped by between 5 and 10 percent. One other result was less expected but no less welcome: The rate of asthma attacks among local children decreased by nearly 50 percent, according to a Johns Hopkins Carey Business School economist’s study of the tax and its impact. The health improvement in the children appeared more gradually than the observed decline in the pollution level. This suggests that the full health benefits from reduced pollution might not occur immediately, says Emilia Simeonova, an assistant professor at the Johns Hopkins Carey Business School. Indeed, the drop in the rate of asthma attacks was more than 12 percent during the first seven months of the tax but soared to 47 percent after a few years of implementation. Simeonova says, “The key takeaways of this paper are that health gains can be realized through efforts to lower air pollution, and that we need to be patient in waiting for the complete picture to emerge.” Asthma, chronic inflammation of the breathing passages, afflicts people of all ages. Its onset in childhood can lead to poor lung development, causing ill effects ― wheezing, breathlessness, chest tightness, and coughing ― that can recur over a lifetime. It is the leading cause of hospitalization among children in the United States, especially those living in densely populated areas with frequent traffic congestion, the paper states. The study by lead author Simeonova and three colleagues examined official health and environmental data compiled in Sweden from 2004 through 2010. The research team focused on health statistics for children up to six years old, who tend to experience the most acute asthma episodes because their families haven’t yet learned how to tame the flare-ups. Stockholm’s congestion tax began as an experiment from January through July 2006. Traffic was reduced by 20 to 25 percent. Deeming the trial a success, the city government reinstituted the congestion tax in August 2007, and it has been in place ever since. The tax costs up to $2.60 (U.S.) per vehicle, depending on the time of day. No charges are made at night, on weekends and public holidays, or during July. Tolls are automatically assessed via scanners that collect the license plate information of cars crossing the “congestion pricing zone.” A positive impact on health was evident from the start. During the seven-month trial period, visits to doctors for asthma symptoms fell from a baseline of 18.7 per 10,000 children to 16.4, a drop of 12 percent. For about a year after the trial period, the congestion tax wasn’t in effect. Pollution levels rose again slightly, though not up to pre-trial levels ― and the number of asthma visits among children continued to fall, to 13.9 per 10,000, or 26 percent below the baseline. A few years after the tax was made permanent, visits had dropped even further, to 10 per 10,000 children, a reduction of 47 percent from the baseline. (The baseline figure of 18.7 asthma visits was an average of statistics from a two-year period before the trial.) Simeonova explains that during the “in between” period when the tax wasn’t being assessed, the level of pollution still wasn’t high enough to reverse the health benefits that Stockholm’s children had begun to realize. But, she adds, the rate of asthma visits probably would have started climbing if the tax had not been made permanent. “These findings show that traffic congestion fees in large cities can have significantly positive effects on health in the short term but even larger effects in the longer term,” says Simeonova. In addition, she points out that Stockholm’s average pollution levels are not nearly as bad as the levels judged acceptable by the United States Environmental Protection Agency. Pollution reductions, then, even in a city of relatively mild smog such as Stockholm, can produce benefits for respiratory health, especially among young children. Simeonova presented the study, titled “Congestion Pricing, Air Pollution and Children’s Health,” at the annual meeting of the American Economic Association in January in Chicago. She and her co-authors ― Professor Janet Currie of Princeton University, Assistant Professor Peter Nilsson of Stockholm University, and Assistant Professor Reed Walker of the University of California at Berkeley ― say their paper is the first to examine how Stockholm’s congestion fee affected both local pollution levels and asthma attacks. It is also the first study to analyze the health effects of long-term exposure to cleaner air in an experimental setting. Funding was provided by the Swedish Research Council.


News Article | September 11, 2016
Site: news.yahoo.com

Imagine getting the bill for an ordinary dinner and noticing, in tiny print, that the restaurant charged you $40 for coffee. Surely you'd be upset. It turns out that hospitals inflate specific prices all the time in ways that aren't transparent to the patient, according to a new study that appeared today (Sept. 7) in the journal Health Affairs. Researchers at Johns Hopkins University in Baltimore found that many hospitals charged more than 20 times the cost of some services, particularly for certain services like CT scans and anesthesiology. The researchers said that the pattern of charging suggests that hospitals strategically look for surreptitious ways to boost revenue. "Hospitals apparently mark up higher in the departments with more complex services, because it is more difficult for patients to compare prices in these departments," Ge Bai, who led the study and is an assistant professor at the Johns Hopkins Carey Business School, said in a statement. [7 Medical Myths Even Doctors Believe] Other high-tech services with exorbitant markups include MRI, electrocardiology (tests of the heart's electrical patterns) and electroencephalography (tests of the brain's impulse patterns), according to the findings. The services that had fees that were more in line with their actual costs to hospitals included "old-school" physical therapy and nursing, the researchers found. The markups occurred in all types of hospitals, both private and nonprofit, the researchers said. Yet hospitals with the highest markups, on average, tended to be for-profit hospitals with strong power within their markets, because of either their system affiliations or their dominance of regional markets. In other words, those hospitals that can mark up prices, do mark up prices, according to the researchers. The pricing can have serious consequences for the payer, the researchers said. For example, hospitals whose costs for a CT scan run at about $100 may charge a patient $2,850 for a CT scan, the study found. "[The markups] affect uninsured and out-of-network patients, auto insurers and casualty and workers' compensation insurers," said Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health and a co-author on the study. "The high charges have led to personal bankruptcy, avoidance of needed medical services and much higher insurance premiums." In their study, based on 2013 Medicare and other data from nearly 2,500 U.S. hospitals, the researchers compared a hospital's overall charge-to-cost ratio, which is the ratio of what the hospital charged compared to the hospital's actual medical expense. The charge is recorded on a document called a chargemaster, which is an exhaustive list of the prices for all hospital procedures and supplies. In 2013, the average hospital with more than 50 beds had an overall charge-to-cost ratio of 4.32 ? that is, the hospital charged $4.32 for every $1 of its own costs. However, at most hospitals that they examined, the researchers found that the charge-to-cost ratio was far higher in departments that were technologically advanced. The highest was in the CT department, with an average ratio of 28.5. [5 Amazing Technologies That Are Revolutionizing Biotech] While understanding that hospitals need to generate revenue, the researchers recommend a cap on markups and consistency from department to department. They also suggest more transparency, by requiring hospitals to provide patients with examples in clear language of rates from area hospitals or what Medicare would pay. "There is no regulation that prohibits hospitals from increasing revenues," Bai told Live Science. "The problem is when they raise rates on people that have no ability to say no because they have an emergency and cannot compare prices." This includes uninsured and out-of-network patients, "because they don’t have bargaining power against hospitals," Bai added. "We realize that any policy proposal to limit hospital markups would face a very strong challenge from the hospital lobby," Anderson said. "But we believe the markup should be held to a point that's fair to all concerned ? hospitals, insurers and patients alike." The researchers noted that Johns Hopkins Hospital has a charge-to-cost ratio of 1.3, among the lowest 1 percent of the sample studied. Maryland, the state in which the hospital is located, in general has the lowest ratios of any other state, they said. Follow Christopher Wanjek @wanjek for daily tweets on health and science with a humorous edge. Wanjek is the author of "Food at Work" and "Bad Medicine." His column, Bad Medicine, appears regularly on Live Science. Copyright 2016 LiveScience, a Purch company. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Gallego G.,Columbia University | Wang R.,Johns Hopkins Carey Business School
Operations Research | Year: 2014

We study firms that sell multiple substitutable products and customers whose purchase behavior follows a nested logit model, of which the multinomial logit model is a special case. Customers make purchasing decisions sequentially under the nested logit model: they first select a nest of products and subsequently purchase one within the selected nest. We consider the multiproduct pricing problem under the general nested logit model with product- differentiated price sensitivities and arbitrary nest coefficients. We show that the adjusted markup, defined as price minus cost minus the reciprocal of price sensitivity, is constant for all the products within a nest at optimality. This reduces the problem's dimension to a single variable per nest. We also show that the adjusted nest-level markup is nest invariant for all the nests, which further reduces the problem to maximizing a single-variable unimodal function under mild conditions. We also use this result to simplify the oligopolistic multiproduct price competition and characterize the Nash equilibrium. We also consider more general attraction functions that include the linear utility and the multiplicative competitive interaction models as special cases, and we show that similar techniques can be used to significantly simplify the corresponding pricing problems. © 2014 INFORMS.

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