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Trade associations and collusion among many agents: evidence from physicians

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  • Jorge Alé‐Chilet
  • Juan Pablo Atal

Abstract

We study a recent case where most gynecologists in one city formed a trade association to bargain for better rates with insurance companies. After unsuccessful negotiations, the physicians jointly terminated their insurer contracts and set a minimum price. We find that subsequent realized prices coincided with Nash‐Bertrand prices, and that the minimum price was barely binding. We show that these actions ensured the association's stability and increased profits. Our findings shed light on the role of trade association in collusion among a large number of heterogeneous agents, and provide insights for the antitrust analysis of trade associations.

Suggested Citation

  • Jorge Alé‐Chilet & Juan Pablo Atal, 2020. "Trade associations and collusion among many agents: evidence from physicians," RAND Journal of Economics, RAND Corporation, vol. 51(4), pages 1197-1221, December.
    • Handle: RePEc:bla:randje:v:51:y:2020:i:4:p:1197-1221
    DOI: 10.1111/1756-2171.12354
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    Cited by:

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    3. Reynaert, Mathias & Ale-Chilet, Jorge & Chen, Cuicui & Li, Jing, 2021. "Colluding Against Environmental Regulation," CEPR Discussion Papers 16038, C.E.P.R. Discussion Papers.
    4. Berman, Ron & Heller, Yuval, 2020. "Naive Analytics Equilibrium," MPRA Paper 103824, University Library of Munich, Germany.
    5. Clark, Robert & Fabiilli, Christopher & Lasio, Laura, 2022. "Collusion in the US generic drug industry," International Journal of Industrial Organization, Elsevier, vol. 85(C).
    6. Gianluca Antonecchia & Ajay Bhaskarabhatla & Enrico Pennings, 2024. "Bargaining Power and Quantity Discounts to Retailers: Evidence from India’s Pharmaceutical Industry," Tinbergen Institute Discussion Papers 24-048/VII, Tinbergen Institute.

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