Simulation of the effect of low-cost companion animal clinics on the market for veterinary services

OBJECTIVE To understand the market dynamics of companion animal veterinary services through the simulation of willingness to pay and willingness to wait as consumer behavior attributes. SAMPLES Numerical distributions for the willingness to pay and willingness to wait of simulated potential clients of companion animal clinics. PROCEDURES Simulations were run by use of numerical distributions to create demand curves and analyze market dynamics across 2 market segments (price sensitive and price insensitive) and different price dispersion between clinics. RESULTS The simulations suggested that the profit-maximizing price of a full-service clinic created a natural segmentation of the companion animal veterinary market, with a majority of clients coming from the price-insensitive segment. The simulation of 2 clinics (full-service and low-cost) with 2 market segments showed an increase in the overall market for veterinary services when a low-cost clinic was present. In addition, the lower the price charged at the low-cost clinic, the greater the profits for the full-service clinic. CONCLUSIONS AND CLINICAL RELEVANCE The presence of multiple prices for the same services, or price dispersion, in a market increases the overall market value and services more clients. Discouraging low-cost companion animal practices from entering the market decreases efficiency by leaving a population of pet owners unserved and ultimately reduces the overall market for veterinary services and the economic viability of veterinary practices.

Electricity Markets Instability: Causes of Price Dispersion

The creation of a single competitive EU energy market is aimed at establishing a fair price in the integrated market space. However, electricity markets in European countries remain rather fragmented, and the marginal pricing method, which is the basic one used in the market, conditions a persistent price dispersion in the search for market equilibrium. This study examines the dispersion of electricity prices in 40 bidding zones in 26 European countries by means of quartile analysis. The geographic orientation of the markets, direction of electricity flows, and structure of electricity generation are considered as the causes of this dispersion. In the study, the geographical boundaries of the electricity markets are determined using the methods of correlation analysis of prices and transitive closure of commercial electricity flows. This makes it possible to single out highly integrated, moderately integrated, poorly integrated, and non-integrated markets. Using cluster analysis, electricity markets are classified according to the structure of electricity generation and direction of flows, with the identification of five clusters based on the dominant type of generation and three clusters based on the dominant direction of electricity supply. For each factor under investigation, the intragroup price dispersion is established. The results of the study have allowed to build a three-dimensional matrix that provides for determining the directions of changes in electricity prices when moving between its quadrants.

THE IMPACT OF TECHNOLOGY ON REGIONAL PRICE DISPERSION IN THE US

We analyze the behavior of inflation in the era of fast pace information thanks to technological advances, especially internet. Owing to readily available information, prices/inflation should quickly converge under perfect competition. To this end, we explore the possibility of price convergence in regional inflation in the USA including the permanency of such a phenomenon if observed, a concern for monetary policy makers. Empirically, we analyze standard deviation of regional inflation with special attention to technology. We show that standard deviation of inflation is not constant over time, but not necessarily ever-declining. Technology seems to help reduce price dispersion across regions.