patent protection in developing countries and global welfare wto obligations versus flexibilities abstract this paper develops a north south model to evaluate the south s incentive for patent protection when a northern firm s investment in quality enhancing research and development r d is affected by its patent policy the model is used to a evaluate the impact of requiring the south to fulfill its key wto obligation of instituting patent protection and b to address the role of two major flexibilities that wto members enjoy with respect to their patent policies the freedom to implement exhaustion policies of their choosing and the right to use compulsory licensing cl subject to certain stipulations two forces drive the model how much the firm invests in r d and whether or not selling in the south maximizes its global profit cl improves consumer access in the south and can even raise innovation and global welfare provided the south implements patent protection innovation and welfare are higher if the north follows national as opposed to international exhaustion however the south s incentive for patent protection is not necessarily stronger under national exhaustion not only is cl more likely to be used under international exhaustion the welfare gain resulting from its application is also higher relative to that under national exhaustion

regulatory policy and the location of bio pharmaceutical foreign direct investment in europe this paper examines the relationship between cross country differences in drug price regulation and the location of biopharmaceutical foreign direct investment fdi in europe simple theory predicts that price regulation in one country might affect total investment but not the location of that investment if sales are global nevertheless some manufacturers threaten that the introduction of price regulation in a country will motivate them to move their investments to other countries are such threats cheap talk or is there evidence that firms avoid price controlling countries when making fdi location choices we use data on 527 investments initiated in 27 european countries between 2002 and 2009 and find that investors are less likely to choose countries with price controls after controlling for other determinants of investment we also observe a relative decline in investment in countries that increased the stringency of regulatory regimes during our sample period the effect is restricted to non manufacturing investments and is most robust for those related to administrative functions

drug prices and research and development investment behavior in the pharmaceutical industry abstract this paper argues theoretically and shows empirically that pharmaceutical r d spending increases with real drug prices after holding constant other determinants of research and development r d specifically an estimated elasticity suggests that a 10 percent increase in the growth of real drug prices is associated with nearly a 6 percent increase in the growth of r d intensity simulations that are based on our multiple regression model indicate that the capitalized value of pharmaceutical r d spending would have been about 30 percent lower if the federal government had limited the rate of growth in drug price increases to the rate of growth in the general consumer price index during the period 1980 2001 moreover the results suggest that a drug price control regime would have resulted in 330 65 fewer new drugs representing over one third of all actual new drug launches brought to the global market during that time period

pharmaceutical cost sharing systems and savings for healthcare systems from parallel trade this paper studies the consequences of parallel trade in a two country model it compares a coinsurance scheme consumers pay a percentage of the drug price and an indemnity insurance scheme reimbursement is independent of the drug price with respect to changes in copayments and public health expenditure in the destination country copayments for patients decrease to a larger extent under indemnity insurance whereas reductions in public health expenditure occur only under coinsurance in the source country copayments increase less under coinsurance whereas health expenditure is reduced more under indemnity insurance in both countries total expenditure under parallel trade is lower

comparing approval procedures for new drugs we analyse how drug approval procedures influence the incentives of pharmaceutical firms to commercialise new drugs in the presence of international reference pricing since 1995 the european medicines agency ema coordinates a centralised approval procedure for specific new drugs in the eu with such a centralised procedure the ema grants simultaneous drug approvals for all eu countries alongside non centralised procedures coexist for approvals of other new drugs and approvals can be sequential we focus on the effects of the exogenous timing of drug approvals either simultaneous or sequential and we compare the effects of centralised versus non centralised procedures on the firms incentives to commercialise new drugs in different markets in a context of international reference pricing we show that a centralised procedure limits the number of countries where the firm commercialises new drugs compared to a non centralised procedure we also show in a simplified framework that countries are better off with non centralised procedures while pharmaceutical firms in theory prefer the drug to be approved everywhere as soon as possible as in an early centralised procedure this is in line with the stated objective of the ema to generate savings for the pharmaceutical firms

collective learning tacit knowledge and regional innovative capacity lawson c and lorenz e 1999 collective learning tacit knowledge and regional innovative capacity reg studies 33 305 317 the paper reviews key ideas in the firm capabilities literature and shows how they can be usefully extended to develop a conception of collective learning among regionally clustered enterprises the paper also explores the relationship between codifiable and tacit knowledge in the innovation process and investigates the claim that tacit knowledge because it is difficult to transfer in the absence of labour mobility may constitute a basis for sustained regional competitive advantage the closing section uses case study material based on minneapolis and cambridge to illustrate the importance for innovation of a regional capability for combining and integrating diverse knowledge and of the sources of such capabilities as pre conditions for successful high technology regions lawson c et lorenz e 1999 l apprentissage collectif la connaissance implicite et la capacite regio

food preferences and nutrition in rural bangladesh t he dietary choice of households near subsistence levels of nutrient intake is one of obvious policy importance in many countries such as bangladesh national goals are set in terms of nutritional intake and there is heavy intervention in the markets for foods however little is known about the manner in which food preferences vary with food expenditure and nutrient intake the design of efficient programs to aid nutritionally deficient households in attaining minimal levels of nutrient intake requires information on all ownand cross price elasticities for both target and non target groups the net effect of a food price subsidy on the consumption of food nutrients cannot be predicted without knowledge of the complete elasticity matrix results presented below demonstrate that substitution effects can be so strong that the subsidization of certain foods quite often reduces nutrient consumption in this study demand equations for nine foods which allow for extremely flexible consumer price response are estimated from the individual budgets of 5 750 rural bangladeshi households estimation at the household level is preferred because it more readily permits the incorporation of household composition variables into the demand analysis such as household size occupation and employment status that are typically lost in aggregation there is also a greater range and variation in expenditure levels than found in grouped data this is of particular importance in the study of nutritional well being as it is the poorest households which are of special interest moreover the household sample provides sufficient degrees of freedom to estimate a simple varying parameter model which requires the estimation of 270 parameters previous econometric analysis of income class specific dietary choice has been limited and not altogether satisfactory pinstrup anderson de londono and hoover 1976 estimated complete sets of price elasticities for different income strata using frisch s scheme in order to study the impact of changes in relative prices on nutrient consumption their results are suspect because of the assumption of want independence necessary for this methodology to be valid alderman and timmer 1980 who were also concerned with studying the relationship between food price policy and nutrient intake by income classes econometrically estimated separate price coefficients for each income group by including slope dummy variables in their demand equations for rice and cassava in indonesia the inclusion of these dummy variables revealed surprisingly large differences in compensated price response across income groups although their results support the notion that poorer households respond differently to prices than the rich the limitations of their data constrained them to consider only two foods and to specify changes in price response which are discontinuous with respect to income i the formulation and estimation of the food demand equations is discussed in section ii below section iii presents the results of the estimation and discusses the nutritional implications of movements in relative food prices and other exogenous variables section iv summarizes our findings

authorized generic entry prior to patent expiry reassessing incentives for independent generic entry abstract originators seek to mitigate the loss of monopoly power by authorizing generic entry prior to patent expiry off patent competition may be adversely affected if authorized generic entry substantially lowers the attractiveness of subsequent generic entry this study assesses the impact of authorized generic entry on independent generic entry in recent cases of patent expiry in germany the results of a recursive bivariate probit regression accounting for the endogeneity of authorized generic entry show that authorized generic entry has no significant effect on the likelihood of generic entry business scope expansion and rent seeking motives drive authorized generic entry decisions

parallel imports price controls and innovation the impact of parallel trade on innovation in r d intensive industries such as pharmaceuticals is a hotly debated question in antitrust and ip policy the well known argument that parallel trade dampens innovation by undermining firms ability to price discriminate has been challenged by recent literature the argument is that with endogenous price controls parallel trade increases innovation by reducing governments incentives to set particularly low price caps in this paper we show that this result crucially depends on the degree of homogeneity of the trading countries the result only holds if consumers in poorer countries have a relatively similar demand for medication as consumers in richer countries instead when countries are relatively heterogeneous parallel trade dampens innovation and lowers welfare by exporting price cap regulation from poorer to richer countries these findings are in line with recent case evidence we also show that when patent length is endogenous richer countries will tend to choose longer patent protection with parallel trade whereas equilibrium price caps tend to be tighter in that case

retailers as agents and the limits of parallel trade abstract the volume of retail level parallel trade is surprisingly small despite persistent international price differences we offer an agency based explanation by considering competition between an original home manufacturer and a foreign retailer the model endogenizes the role of the retailer as an agent with private information on the perceived quality of the good in its own market the manufacturer cannot control the retailer once the latter has ordered its sales quantity but it can limit the initial offer if parallel trade is permitted this offer will fall if there is incomplete information resulting in a small or zero volume of parallel trade this outcome makes both the original producer and foreign consumers worse off while offering little benefit to home consumers compared to the case where such trade is banned

equilibrium parallel import policies and international market structure in a north south vertically differentiated duopoly the analysis in this paper derives equilibrium government policies towards parallel imports by incorporating strategic interaction at the policy setting stage and the product market the model sheds new light on i the effects of parallel import policies on pricing behavior of firms and ii the interdependence of national parallel import policies if demand asymmetry across countries is sufficiently large the north forbids parallel imports to ensure its firm sells in the south thereby generating international price discrimination the south s most preferred market outcome as the equilibrium when demand structures are relatively similar across countries the north permits parallel imports and uniform pricing its most preferred market outcome obtains

international effects of national regulations external reference pricing and price controls under external reference pricing erp the price that a government permits a firm to charge in its market depends upon the firm s prices in other countries in a two country home and foreign model where demand is asymmetric across countries we show that home s unilaterally optimal erp policy permits the home firm to engage in a threshold level of international price discrimination above which it is just willing to export if the firm faces a price control abroad or bargains over price with the foreign government an erp policy can even yield higher home welfare than a direct price control

parallel imports and the pricing of pharmaceutical products evidence from the european union we consider policy issues regarding parallel imports pis of brand name pharmaceuticals in the european union where such trade is permitted we develop a simple model in which an original manufacturer competes in its home market with pi firms the model suggests that for small trade costs the original manufacturer will accommodate the import decisions of parallel traders and that the price in the home market falls as the volume of parallel imports rises using data from sweden we find that the prices of drugs subject to competition from parallel imports fell relative to other drugs over the period 1994 1999 econometric analysis finds that parallel imports significantly reduced manufacturing prices by 12 19 there is evidence that this effect increases with multiple pi entrants

sales growth of new pharmaceuticals across the globe the role of regulatory regimes prior marketing literature has overlooked the role of regulatory regimes in explaining international sales growth of new products this paper addresses this gap in the context of new pharmaceuticals 15 new molecules in 34 countries and sheds light on the effects of regulatory regimes on new drug sales across the globe based on a time varying coefficient model we find that differences in regulation substantially contribute to cross country variation in sales one of the regulatory constraints investigated i e manufacturer price controls has a positive effect on drug sales the other forms of regulation such as restrictions of physician prescription budgets and the prohibition of direct to consumer advertising dtca tend to hurt sales the effect of manufacturer price controls is similar for newly launched and mature drugs by contrast regulations on physician prescription budgets and dtca have a differential effect for newly launched and mature drugs whereas the former hurts mature drugs more the latter has a larger effect on newly launched drugs in addition to these regulatory effects we find that national culture economic wealth and lagged sales also affect drug sales our findings may be used as input by managers for international launch and marketing decisions they may also be used by public policy administrators to assess the role of regulatory regimes in pharmaceutical sales growth

structural changes in the demand for food in asia empirical evidence from taiwan many asian countries are expected to undergo structural transformations in their economies and rapid urbanization over the next 25 years the changes in tastes and lifestyles engendered by urban living are likely to have significant influences on food demand changes in marketing systems and occupational changes closely linked with increasing gnp per capita also may influence the demand for food in this paper estimates presented for taiwan demonstrate that structural changes in food demand as distinguished from changes due to income and price effects have been significant factors driving the rapid changes in dietary patterns seen in east asia over the past three decades because most previous demand studies have ignored the possible influence of structural shifts which are highly correlated with increases in per capita income over time the effects of income on food demand have been overestimated

industrial districts old wine in new bottles harrison b 1992 industrial districts old wine in new bottles reg studies 26 469 483 according to the theory of industrial districts a new wave of economic growth is being led in a number of regions in europe north america and east asia by spatially concentrated networks of mostly small and medium sized enterprises often using flexible production technology and characterized by extensive local interfirm linkages does this amount to a re emergence of the dominance of what urban and regional economists call agglomeration economies over the well known pressures on business to spatially disperse its operations neoclassical economic theorizing from marshall to perroux provides one perspective on the contemporary industrial district phenomenon another is afforded by granovetter s more recent elaboration of the ideas of embedding under and over socialization confronting each of these theoretical approaches with the other leads me to conclude that the industrial district prototypes involv

cross national price differences for pharmaceuticals how large and why bilateral drug price and quantity indexes based on comprehensive data for seven countries us canada france germany italy japan and the uk refute the conventional wisdom that us drug prices are much higher than elsewhere for laspeyres us weighted indexes previous drug price comparisons are biased by unrepresentative samples and unweighted indexes quasi hedonic regression shows that cross national price differences reflect differences in product characteristics and in their implicit prices which reflect the regulatory regime strict price regulation systematically lowers prices for older molecules and globally diffused molecules generic competition lowers prices in less regulated regimes which also have more price elastic demand

does television entry decrease the number of movie theaters this paper empirically examines the impact of competition in the television tv industry on the number of movie theaters their attendance and their box office revenues studies of firm entry usually focus on the impact of regulation on economic outcomes within an industry thereby neglecting its impact on neighboring industries using changes in regulation in the spanish local tv station industry we estimate the impact of tv entry on the movie theater industry between 1993 and 2005 our findings show that local tv entry decreased the number of theaters and screens in a province as well as movie attendance and box office revenues jel l11 l43 l82

are estimates of calorie income fxelasticities too high a recalibration of the plausible range abstract the wide range of calorie income elasticities in the literature results in large part from the particular calorie and income variables used for estimation elasticities across four estimation techniques and four calorie income variable pairs for a sample of philippine farm households ranged from 0 03 to 0 59 estimates associated with calorie availability are biased upwards first because random errors in measuring food purchases are transmitted by construction both to calorie availability and total expenditures and second because the residual difference between family calorie intake and household calorie availability will often increase with income the calorie intake total expenditure variable pair gives the preferred elasticity estimate in the 0 08 0 14 range

international aspects of merger policy a survey this paper surveys the literature on merger policy in open economies we first adopt a reduced form approach to derive general insights on the scope for conflict between national antitrust authorities and on the gains from international merger policy coordination taking trade costs as given we use standard oligopoly models to derive conditions on market structure under which underenforcement or overenforcement of national merger policies can arise we then study the interactions between merger policy and trade policy and find that trade liberalization often leads to stricter national merger policies we conclude by discussing empirical evidence on conflict between antitrust authorities

price regulation and parallel imports of pharmaceuticals abstract this paper studies the effects of price regulation and parallel imports in the on patent pharmaceutical market in a theory model where the producer price is subject to bargaining between the brand name producer and a distributor we show that the effects of stricter price regulation crucially depend on whether the producer faces competition from parallel imports while parallel imports improve the bargaining position of the distributor price regulation counteracts this effect and may even be profitable for the producer we test the implications of our model on a unique dataset with information on sales and prices at both producer and retail level for 165 substances over 4 years 2004 2007 we show that stricter price regulation reduces competition from parallel imports and has no strictly negative effect on producer profits in the presence absence of parallel imports our results suggest that price regulation might improve static efficiency without being harmful for dynamic efficiency in the presence of parallel imports

competition in off patent drug markets issues regulation and evidence in recent years health insurers have placed a great deal of emphasis on the ability of generic medicines to deliver significant savings to overstretched health care budgets due to their lower cost and potential for a more efficient resource allocation in this paper we study market developments after patent expiry whether health insurance captures the financial benefits from cheaper generics and whether regulation and product differentiation among others have any power in explaining originator and generic price movements generic entry and diffusion we find that health insurance does not capitalize fully or fast enough on the cost advantage of generic medicines either because generic policies do not encourage their fast uptake or because generic drug prices are high and frequently tied directly or indirectly to originator drug prices we also find that reference pricing a particular form of reimbursement regulation encourages generic entry and reduces generic prices but only marginally finally in generic markets characterized by homogeneous products we find evidence of product differentiation which is impacting prices upwards rather than downwards if health insurance is to benefit fully from generic medicines it ought to encourage faster uptake and price competition and discourage price fixing regulation that ties generic prices to those of originator brands panos kanavos joan costa font and elizabeth seeley

is american health care uniquely inefficient evidence from prescription drugs abstract alan garber and jonathan skinner 2008 famously conjectured that the us health care system was uniquely inefficient relative to other countries we test this idea using cross country data on prescription drug sales newly linked with an arguably objective measure of relative therapeutic benefits or drug quality specifically we investigate how higher and lower quality drugs diffuse in the us relative to australia canada switzerland and the uk our tabulations suggest that lower quality drugs diffuse more in the us relative to high quality drugs compared to each of our four comparison countries consistent with garber and skinner s conjecture

static and dynamic effects of health policy evidence from the vaccine industry public policies designed to increase utilization of existing technologies may also affect incentives to develop new technologies this paper investigates this phenomenon by examining policies designed to increase usage of preexisting vaccines i find that these policies were associated with a 2 5 fold increase in clinical trials for new vaccines for several diseases the induced innovation is socially wasteful though small in magnitude in one case however the dynamic social welfare benefits from induced innovation exceed the policies static benefits from increasing vaccination with existing technology these findings underscore the importance of including technological progress in economic analysis of public policy

reference pricing and firms pricing strategies abstract within a horizontal differentiation model and allowing for heterogeneous qualities we analyze the effects of reference pricing reimbursement on firms pricing strategies with this analysis we find inherent incentives for firms pricing behavior and consequently we shed some light on the time consistency of such policy the analysis encompasses different reference price rules i reference price as the minimum of the observed prices in the market ii reference price as a linear combination of firms prices results show that under the minimum policy firms are not able to coordinate on higher prices while the linear policy implicitly provides a coordination device we have also found that relatively to the linear policy when the reference price is the minimum of observed prices after policy implementation total and private expenditures are higher and consumer surplus and firms profits are lower with quality differentiation both the minimum and linear policies unambiguously lead to higher prices

pharmaceutical price controls and entry strategies abstract this paper finds that the use of price controls has a statistically and quantitatively important effect on the extent and timing of the launch of new drugs firms headquartered in countries that regulate price reach fewer markets than those in countries without price controls companies avoid price controlled markets and are less likely to introduce products in additional markets after entering a price controlled country launches into low price european countries are further delayed following legalization of parallel imports the results suggest that price regulation in one country affects entry into other countries and may affect the strategies of domestic firms

margins and market shares pharmacy incentives for generic substitution we study the impact of product margins on pharmacies incentive to promote generics instead of brand names first we construct a theoretical model where pharmacies can persuade patients with a brand name prescription to purchase a generic version instead we show that pharmacies substitution incentives are determined by relative margins and relative patient copayments second we exploit a unique product level panel data set which contains information on sales and prices at both producer and retail level in the empirical analysis we nd a strong relationship between the margins of brand names and generics and their market shares in terms of policy implications our results suggest that pharmacy incentives are crucial for promoting generic sales

pricing of drugs with heterogeneous health insurance coverage in this paper we examine the role of insurance coverage in explaining the generic competition paradox in a two stage game involving a single producer of brand name drugs and n quantity competing producers of generic drugs independently of brand loyalty which some studies rely upon to explain the paradox we show that heterogeneity in insurance coverage may result in higher prices of brand name drugs following generic entry with market segmentation based on insurance coverage present in both the pre and post entry stages the paradox can arise when the two types of drugs are highly substitutable and the market is quite profitable but does not have to arise when the two types of drugs are highly differentiated however with market segmentation occurring only after generic entry the paradox can arise when the two types of drugs are weakly substitutable provided however that the industry is not very profitable in both cases that is when market segmentation is present in the pre entry stage and when it is not the paradox becomes more likely to arise as the market expands and or insurance companies decrease deductibles applied on the purchase of generic drugs

pharmaceutical pricing in a regulated market we compare how new pharmaceuticals are priced in the price regulated swedish market with how they are priced in the u s market as studied by lu and comanor 1998 we collect a data set consisting of all new chemical entities nces launched in sweden between 1987 and 1997 and test the same models as lu and comanor in line with their results we find that introductory prices depend on the degree of therapeutic innovation contrary to the results from the u s market swedish real prices for nces fall substantially over time for all classes of therapeutic innovation also contrary to the findings of lu and comanor we find no effect of the presence of branded substitutes on either introduction prices or price dynamics our results indicate that the price regulation discourages price competition between brandname drugs

pharmaceutical innovation and parallel trade abstract this paper proposes a north south model to study the interaction between price regulation policies and parallel trade with a particular focus on the pharmaceutical sector we show that under parallel trade r d investment can rise only when the south government takes into full account its impact both on investment and on the firm s decision to supply the regulated country this arises because of a complete withdrawal from price regulation when policy choices are endogenized indeed the south wants to achieve this level of full commitment when it is large in size when instead it is smaller in size the south chooses an intermediate form of commitment whereby it anticipates its effect only on local distribution and delivery but not on global r d investment as a response to these credible levels of price control commitments the north reacts by allowing parallel imports from the south

characteristics of demand for pharmaceutical products an examination of four cephalosporins we model demand for four cephalosporins and compute own and cross price elasticities between branded and generic versions of the four drugs we model demand as a multistage budgeting problem and we argue that such a model is appropriate to the multistage nature of the purchase of pharmaceutical products in particular the prescribing and dispensing stages we find quite high elasticities between generic substitutes and also significant elasticities between some therapeutic substitutes

the effect of price and income changes on food energy intake in sri lanka data is used to analyze the food acquisition behavior of households from a 1980 81 survey designed to be nationally sectorally and regionally representative of sri lanka the poor are shown to be much more responsive to price and income changes than other income groups the urban population generally exhibits lower income elasticities of demand for food commodities the poor appear to efficient substitutors thereby mitigating the effects of a price change on caloric intake the important exception is rice whose elasticity of calorie consumption with respect to price was about 4 times higher than for any other commodity the reluctance of households to substitute for rice even when faced with rising prices coupled with its large budget share show rice to be the most important consumption good higher rice prices are an important determinant of poverty for landless and urban workers moderating food prices preferably through technological change is a key ingredient to raising consumption among the poor simulations show that even if there are rapid and proportional increases in expenditures of all income groups this will not dramatically increase caloric intake among the poor however if the absolute value of the increase in real expenditures were distributed equally to all households there would be a marked increase in the of households consuming an adequate diet

strategic pricing of new pharmaceuticals this paper provides empirical evidence on the leading factors affecting the prices of new pharmaceuticals both at introduction and after 4 6 and 8 years most important is the extent of therapeutic advance embodied in a new product for drugs which represent important therapeutic gains launch prices can be two or three times those of existing drugs used for the same purposes while drugs that largely duplicate the actions of currently available products are typically priced at comparable levels in addition the number of branded substitutes has a substantial negative effect on launch prices which reflects the importance of competitive pressures duplicate products thereby play an important economic role in pharmaceutical markets

regulating innovation with uncertain quality information risk and access in medical devices 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

price controls in liberia abstractin 2009 the liberian government removed a wide reaching set of price controls compared with goods never subject to price ceilings goods whose prices were liberalized showed increased pri

estimates of the demand for ethical pharmaceutical drugs across countries and time the aggregate demand for ethical pharmaceutical drugs using country level data for seven countries pooled across an eight year period is estimated the regression analysis reveals that the net price paid by consumers has a negative effect on the average number of prescriptions per capita while income has a positive effect moreover the parameter estimates suggest thst the demand is relatively elastic in most countries and that the income elasticity is greater than one

patents and the global diffusion of new drugs analysis of the timing of launches of 642 new drugs in 76 countries during 1983 2002 shows that patent and price regulation regimes strongly affect how quickly new drugs become commercially available in different countries price regulation delays launch while longer and more extensive patent rights accelerate it health policy institutions and economic and demographic factors that make markets more profitable also speed up diffusion the estimated effects are generally robust to controlling for endogeneity of policy regimes with country fixed effects and instrumental variables the results highlight the important role of policy choices in driving the diffusion of new innovations

rice in asia is it becoming an inferior good empirical results using time series and cross sectional data indicate that rice in asia is becoming an inferior good income elasticities declined and in some cases became negative between 1961 and 1985 in most of the fourteen asian countries studied accordingly domestic demand for rice in these countries is not likely to grow as rapidly as it has in the past as a consequence there is a potential for excess supplies of rice to develop in asia putting downward pressure on rice prices while governments in asian countries may need to adjust their rice policies in the future world rice suppliers may need to develop new markets for rice

regulation and pricing of pharmaceuticals reference pricing or price cap regulation we study the relationship between regulatory regimes and pharmaceutical firms pricing strategies using a unique policy experiment from norway which in 2003 introduced a reference price rp system called index pricing for a sub sample of off patent pharmaceuticals replacing the existing price cap pc regulation we estimate the effect of the reform using a product level panel dataset covering the drugs exposed to rp and a large number of drugs still under pc regulation in the time before and after the policy change our results show that rp significantly reduced both brand name and generic prices within the reference group with the effect being stronger for brand names we also identify a negative cross price effect on therapeutic substitutes not included in the rp system in terms of policy implications the results suggest that rp is more effective than pc regulation in lowering drug prices while the cross price effect raises a concern about patent protection

price regulation and relative delays in generic drug adoption abstract increasing the adoption of generic drugs has the potential to improve static efficiency in a health system without harming pharmaceutical innovation however very little is known about the timing of generic adoption and diffusion no prior study has empirically examined the differential launch times of generics across a comprehensive set of markets or more specifically the delays in country specific adoption of generics relative to the first country of generic adoption drawing on data containing significant country and product variation across a lengthy time period 1999 2008 we use duration analysis to examine relative delays across countries in the adoption of generic drugs our results suggest that price regulation has a significant effect on reducing the time to launch of generics with faster adoption in higher priced markets the latter result is dependent on the degree of competition and the expected market size

arbitrage across borders why itunes gift cards sell above face value on ebay i introduction firms that operate internationally often charge different prices for the same product in different countries these price differences may be due to cost differences exchange rate fluctuations and or price discrimination where firms set prices based on consumers willingness to pay for the product there is an extensive literature on international price differences but nearly all of this research has focused on physical goods where arbitrage the situation where someone buys the product from a low price country and resells it to someone in a high price country tends to be relatively costly because of transaction costs including search costs and transportation costs there have been no empirical papers in the economics literature thus far on the arbitrage of downloadable goods this paper looks at the case of itunes which sells downloadable music videos books ipad and iphone applications and other content worldwide and shows how the sale of itunes gift cards above face value on the auction website ebay is linked to the arbitrage of itunes products itunes which is operated by apple first started selling music downloads in 2003 and by 2008 it was the largest music retailer in the united states and the world 1 people typically purchase products from their own country specific itunes stores but not all content is available in all countries due in part to licensing restrictions and consumer preferences e g itunes does not sell music movies and tv shows in many countries prices also vary across countries as detailed in section iii of this paper one can easily switch to any other country s itunes store with just a few mouse clicks in particular the u s store would seem to be a natural focal point and it tends to have lower prices and a wider selection however in order to actually purchase something from the u s store one needs to have either a u s credit card or a u s itunes gift card available in denominations ranging from 10 to 100 in the primary market through apple and its authorized sellers such as wal mart and best buy as such it can be surmised that some individuals outside the united states may be willing to purchase itunes gift cards on ebay in order to gain access to the u s store it should be noted that itunes terms and conditions specify that the u s store s products are available only to buyers in the united states we can see the evidence for this through the sale of itunes gift cards on ebay nearly 200 itunes gift cards are sold daily on ebay about 10 of all gift cards and more than half of these itunes gift cards sell above face value a phenomenon that is unusual among gift cards after discussing some background information and related literature this paper examines more than 1 300 ebay transactions in february 2011 and finds that itunes gift cards targeted to international buyers which are often sent electronically are more likely to have higher prices controlling for seller reputation shipping charges and other variables this indicates that non u s buyers are willing to pay a premium for the gift cards because they are unable to obtain them otherwise information about the buyers countries allows us to see whether it is the u s store s greater product availability or its lower prices that buyers are interested in this paper addresses an important issue because of the rising popularity of the sales of downloadable content worldwide this market includes music videos books video games and applications the internet has also made it easier for buyers and sellers in different countries to find one another and in the case of digital products exchange goods if arbitrage is widespread firms may decide to either minimize price differences between countries stop selling in low price countries altogether or use the legal system or other methods to prevent arbitrage in terms of the big picture this issue has implications for social welfare copyright enforcement and international trade policies and governments in some countries may also be concerned if their citizens have access to goods that are banned

strategic procurement openness and market structure abstract we examine strategic procurement behaviour by governments and its effect on market structure in sectors such as defence and pharmaceuticals where the government is the dominant consumer in a world economy with trade between producer countries and between producers and non producers we use a modified dixit stiglitz utility function with an independent taste for variety there is free entry and exit by firms but by anticipating their participation constraint governments can indirectly choose the number of domestic firms and their size through its choice of procurement price unlike the standard model with no independent taste for variety and no external sector of non producer countries there are incentives for subsidies openness impacts on industrial structure and procurement coordination between producer countries affects firm numbers

pricing patent loss and the market for pharmaceuticals dustry the drug price competition and patent term restoration act of 1984 very clearly reflects the determination of policy makers to simultaneously address issues of price control and technical progress the 1984 act increased returns to innovation by extending the period of patent protection to take into account the time between receipt of a patent and food and drug administration fda approval of a drug for sale in the market the 1984 act also reduced the testing requirements for approval of new generic brands of existing chemical entities thus reducing entry barriers in markets where patents have expired the expected outcome from eased entry conditions for generic substitutes was substantially enhanced price competition and lower prices for brand name drugs in fact prices for brand name drugs have tended to increase following entry by generics wagner and duffy 28 examined price changes for top selling generics and name brands they show substantial price increases in brand name prices accompanying large reductions in generic prices as entry of generics occurs grabowski and vernon 9 examined data on 18 major orally administered rug products subject to generic competition between 1983 and 1987 and found that the name brand price increased by an average of 7 one year subsequent to generic entry and 11 two years following generic entry

compulsory licensing price controls and access to patented foreign products abstract we analyze how a price control and the threat of compulsory licensing cl affect consumer access in a developing country south to a patented foreign product in the model the southern government sets the level of the price control on a northern patent holder who chooses between entry and voluntary licensing vl while entry incurs a higher fixed cost licensed production is of lower quality if the patent holder does not work its patent locally the south is free to use cl the threat of cl ensures that consumers have access to a lower quality version of the patented good when the patent holder chooses not to work its patent locally improves the terms at which vl occurs can cause the patent holder to switch from vl to entry and can delay consumer access when cl replaces vl or entry we also show that a price control and cl are mutually reinforcing instruments

demystifying the role of culture in innovative regional economies james a 2005 demystifying the role of culture in innovative regional economies regional studies 39 1197 1216 within the regional learning and innovation literature the precise impact of regional culture on firms competitive performance remains unspecified in response this paper draws on research on utah s high tech industrial agglomeration embedded in a highly visible regional culture mormonism focusing specifically on computer software firms the paper first shows how the cultural embeddedness of firms in the region is best understood as a series of sustained tensions between 1 self identified regional cultural traits imported into the firm versus 2 key elements of corporate cultures known to underpin innovation second the paper measures the material impact of that regional cultural embedding on firms innovative capacities and hence abilities to compete finally it outlines the wider relevance of the author s work with regard to the spatial limits imposed on high tech cluster po

reference pricing competition and pharmaceutical expenditures theory and evidence from a natural experiment abstract we study the impact of regulation on competition between brand names and generics and pharmaceutical expenditures using a unique policy experiment in norway where reference pricing rp replaced price cap regulation in 2003 for a sub sample of off patent products first we construct a vertical differentiation model to analyze the impact of regulation on prices and market shares of brand names and generics then we exploit a detailed panel data set at product level covering several off patent molecules before and after the policy reform off patent drugs not subject to rp serve as our control group we find that rp significantly reduces both brand name and generic prices and results in significantly lower brand name market shares finally we show that rp has a strong negative effect on average molecule prices suggesting significant cost savings and that patients copayments decrease despite the extra surcharges under rp

parallel trade and pharmaceutical prices a game theoretic approach and empirical evidence from the european union this paper studies whether parallel traded products spark price competition in pharmaceutical markets and whether they are any cheaper than locally sourced products we follow a game theoretic approach and employ descriptive statistics and econometric methods to study the effects of parallel trade on competition from a theoretic and empirical perspective the theoretic approach suggests that there is a unique nash equilibrium and the parallel trader sets prices at the same level as the locally sourced product while the price of the latter remains unaffected by parallel trade however there may be deviations from this equilibrium in the presence of particular policies or generic competition in which case the parallel traded product may be priced at lower levels than the locally sourced product empirical analysis confirms the predictions of the theory descriptive statistics show that there is no gap between locally sourced and parallel traded products unless generics or policies encouraging parallel trade are present results of the econometric analysis show that parallel trade does not trigger price competition and that the price of the locally sourced product remains unaffected by parallel trade therefore any savings for health insurance occurring as a result of parallel trade are limited

differential pricing parallel trade and the incentive to invest abstract i consider the case for imposing uniform pricing on a monopolist in a setting where markets can be segmented according to differences in marginal costs and or consumer demand i also analyze the ex ante impact on incentives to invest in r d i show how two opposite trade offs arise when differential pricing is demand based uniform pricing has good ex post welfare properties but leads to lower investment ex ante conversely when differential pricing is cost based uniform pricing has bad ex post welfare properties but leads to higher investment ex ante

parallel imports demand dispersion and international price discrimination parallel imports goods imported by unauthorized resellers are advocated worldwide for undermining international price discrimination for a continuum of markets we find that uniform pricing by a monopolist yields lower global welfare than third degree discrimination if demand dispersion across markets is large though uniform pricing avoids output misallocation too many markets go unserved mixed systems permitting discrimination across but not within designated groups of markets yield significantly higher welfare than uniform pricing or unrestricted multimarket discrimination and can pareto dominate uniform pricing thus while parallel imports might benefit some countries our results weaken the multilateral case for allowing them

the impact of parallel imports on investments in cost reducing research and development abstract we develop a two country model of endogenous investment in process innovation by a manufacturer facing competition from parallel imports pi we find that the distortions associated with pi inhibit innovation however the difference between the manufacturer s expected profits under successful and failed innovation is u shaped in the cost of engaging in pi thus the reduction in r d investment depends on both legality of pi and transport costs the reduction in innovation could harm global welfare depending on whether the manufacturer was deterring pi with a high wholesale price if so banning such trade would raise expected welfare

parallel imports and repair services abstract this study explores the welfare effects of parallel imports when the producer may refuse to provide repair services for parallel imported units which reduces the degree of price convergence between countries if the probability of the product s breakdown is endogenously determined by the producer permitting parallel imports could increase the probability because a higher probability leads to a larger price gap as a result it is possible that prices increase and welfare deteriorates in both countries this negative welfare effect is more likely to emerge as the liberalization of trade in goods proceeds the prohibition of service discrimination recovers the positive welfare effect

should the us allow prescription drug reimports from canada as a result of public outrage over lower prescription drug prices in canada congress passed legislation that would allow these drugs to be imported into the us the lower canadian prices reflect price regulation opponents of allowing these imports have argued that the us will import canadian price controls and that profits of pharmaceutical companies will be hurt in this paper a model is developed in which a good sold in the foreign country is subject to a negotiated price which is determined in a nash bargaining game when imports back into the home country are allowed this negotiated price also becomes the domestic price this causes the home firm to make fewer price concession in the nash bargaining game home firm profits are found to rise under the reimport regime for both of the demand functions analyzed in this paper

does regulation drive out competition in pharmaceutical markets abstract most countries regulate pharmaceutical prices either directly or indirectly on the assumption that competition is at best weak in this industry this paper tests the hypothesis that regulation of manufacturer prices and retail pharmacy margins undermines price competition we use data from seven countries for 1992 to examine price competition between generic competitors different manufacturers of the same compound and therapeutic substitutes similar compounds under different regulatory regimes we find that price competition between generic competitors is significant in unregulated or less regulated markets united states united kingdom canada and germany but that regulation undermines generic competition in strict regulatory systems france italy and japan regulation of retail pharmacy further constrains competition in france germany and italy regulation thus undermines the potential for significant savings on off patent drugs which account for a large and growing share of drug

vertical distribution parallel trade and price divergence in integrated markets we develop a model of vertical pricing in which an original manufacturer sets wholesale prices in two markets that are integrated at the distributor level by parallel imports pi the manufacturing rm needs to set these two prices to balance three competing interests restricting competition in the pi recipient market avoiding resource wastes due to actual trade and reducing the double markup problem in the pi source nation

commodity taxation and parallel imports we examine the interaction between commodity taxes and parallel imports in a two country model with imperfect competition while governments determine non cooperatively their commodity tax rate the volume of parallel imports is determined endogenously by the retailing sector we compare the positive and normative implications of having commodity taxes based on destination or origin principle we show that as the volume of parallel imports increases non cooperative origin taxes converge while destination taxes diverge moreover origin taxes are more similar and lead to higher aggregate welfare levels than destination taxes

compulsory licensing and patent protection a north south perspective in a stylized model involving a developing country called south and a foreign patent holder we analyze whether and how the incidence and social value of compulsory licensing cl depends upon the south s patent protection policy if south is free to deny patent protection cl fails to arise in equilibrium and the option to use it makes both parties worse off if south is obligated to offer patent protection cl can occur and even yield a pareto improvement the ability to control price increases the south s incentive for patent protection as well as the likelihood of cl this article is protected by copyright all rights reserved

regulation and competition in the taiwanese pharmaceutical market under national health insurance this article investigates the determinants of the prices of pharmaceuticals and their impact on the demand for prescription drugs in the context of taiwan s pharmaceutical market where medical providers earn profit directly from prescribing and dispensing drugs based on product level data we find evidence that the profit seeking behavior of the medical providers in the prescription drug market transfers the force of competition from the unregulated wholesale market to the regulated retail market and hence market competition still plays an important role in the determination of the regulated price we also find that the profit seeking behavior plays a similar role to advertising in that it increases the brand loyalty and hence lowers price elasticity an important implication of our study is that the institutional features in the pharmaceutical market matter in shaping the nature of pharmaceutical competition and the responsiveness of pharmaceutical consumption with respect to changes in price

alfred marshall lecture intellectual property rights protection in developing countries the case of pharmaceuticals patent enforcement in developing countries generates considerable controversy especially when patents involve potentially life saving drugs this paper argues that common concerns regarding the effects of patents on prices and on research incentives of pharmaceutical multinationals are misplaced rather the most significant effects are likely to concern access to patented drugs in poor countries because prices in developing countries are much lower than in the developed world multinationals may choose to enter such markets with a delay or not at all implying a complete loss of access to patented drugs in developing countries even when multinationals enter countries like india their marketing and distribution networks are not currently built out leading to limited access within the country such considerations may provide a justification for policies targeting access in the short and medium run such as compulsory licensing

the determinants of international patenting for nine agricultural biotechnology firms this paper examines international patent application decisions of nine agricultural biotechnology firms from 1990 2000 in australia brazil canada china the european patent office japan and south africa the data reveal a low frequency of international applications despite an initial united states application indicating very low values for patents abroad the results indicate that invention quality plays an important role in firms decisions to patent abroad and that a single international application is a good predictor of multiple international applications further significant country fixed effects suggest wide differences in business climates and patent enforcement among countries

do treatment decisions depend on physicians financial incentives we study whether and how physicians respond to nancial incentives making use of detailed register data on the health care services provided to patients by general practitioners gps in norway over a six year period 2006 11 to identify gps treatment responses we exploit that specialisation in general medicine entitles the gps to a higher consultation fee implying a change in total and relative fee payments to control for demand and supply factors related to becoming a specialist we estimate a gp fixed effect model focusing on a narrow time window around the date of specialist certi cation our results show a sharp response by the gps immediately after obtaining specialist certi fication and thus a higher consultation fee the number of visits increase while the treatment intensity prolonged consultations lab tests medical procedures decline these fi ndings are consistent with a theory model where partly profit motivated gps face excess demand and income effects are sufficiently small finally we find no evidence for adverse health effects measured by emergency care centre visits on patients due to the change in gps treatment behaviour after becoming a specialist

parallel trade international exhaustion and intellectual property rights a welfare analysis this paper analyses the issue of parallel trade arbitrage for products protected by intellectual property rights many countries have traditionally allowed owners of intellectual property rights to prohibit arbitrage in the face of international price discrimination in a well known paper malueg and schwartz 1994 showed that this policy decreases social welfare when the same markets are served in both regimes with and without arbitrage their model considered only the setting of prices and not investment in product development we consider a two stage game where firms choose quality first and then prices since the threat of arbitrage ex post reduces the incentive to invest ex ante the net benefits of parallel trade may vanish we also show that the size of the welfare effects is significantly affected by the presence of a generic product which represents a form of competition for the monopolist the monopolist will introduce a fighting brand to compete with the generic which dilutes but does not eliminate the result on the adverse effects of parallel trade on investments

growing firms and the credit constraint restricted access to finance either debt or equity or both is potentially a significant constraint on the growth of small businesses financing problems arise primarily as a consequence of information asymmetries the adverse effects of these may in part be counteracted by the use of collateral as a signalling and bonding mechanism and or by the development of a good working relationship between lender and borrower if the form of information asymmetry differs for growth firms or if the effects of information asymmetries are less easily ameliorated then growing firms may be more adversely affected by credit constraints if growth is contingent upon access to credit then the generalised implications for the economy may be significant and detrimental using evidence from a survery of over 6 000 firms conducted in 1992 this paper addresses the extent to which growth firms are adversely affected by a credit constraint the results suggest that the credit constraint for growing firms per se is no greater but growth firms may still experience a credit constraint as a consequence of their relative youth however there is evidence to suggest that firms expecting to grow in the future do perceive a rather tighter credit constraint but this may be partly or wholly offset by a generally better relationship with their bank

the effect of inertia on brand name versus generic drug choices abstract consumers tendency to repurchase products is called inertia this study investigates inertia in brand name and generic drug choices which is manifested by the slow and limited adoption of generic drugs despite their lower prices we use claims data from japan and focus on the generic entry of a widely prescribed lipid lowering drug pitavastatin observing the periods before and after the generic entry gives us a unique opportunity to identify the effect of inertia we construct a choice model that incorporates price heterogeneous brand preferences and inertia to quantify each component s magnitude we find that both inertia and heterogeneity in brand preferences have substantial effects counterfactual simulations suggest that a nudging policy that removes inertia from previous brand name users such as by alerting the patients to switch to cheaper generic drugs may have substantial effects and enable patients to choose optimally

late stage pharmaceutical r d and pricing policies under two stage regulation 2016 elsevier b v we present a model combining the two regulatory stages relevant to the approval of a new health technology the authorisation of its commercialisation and the insurer s decision about whether to reimburse its cost we show that the degree of uncertainty concerning the true value of the insurer s maximum willingness to pay for a unit increase in effectiveness has a non monotonic impact on the optimal price of the innovation the firm s expected profit and the optimal sample size of the clinical trial a key result is that there exists a range of values of the uncertainty parameter over which a reduction in uncertainty benefits the firm the insurer and patients we consider how different policy parameters may be used as incentive mechanisms and the incentives to invest in r d for marginal projects such as those targeting rare diseases the model is calibrated using data on a new treatment for cystic fibrosis

the role of firm characteristics in pharmaceutical product launches this paper examines the determinants of new pharmaceutical launches since 1980 in the g7 nations using discrete time hazard models despite the obvious incentive to amortize the large sunk costs of drug development over many markets entry occurs in only 4 of the opportunities the results indicate that firm characteristics such as domestic status and experience in the local market are important in explaining product launches in addition to market characteristics also the interaction between the innovating firm and target country is a critical component of profitability new drugs are 1 5 times more likely to be launched in markets that share a border or a language of a drug company s country of headquarters even for multinational firms the effect of competition depends on the characteristics of both the potential entrant and the incumbents domestic entrants prefer to compete with domestic incumbents although this is an industry with the potential for ubiquitous licensing and low transportation costs the specific match quality between the innovating firm and market conditions remains an important determinant of entry

the consumer welfare implications of governmental policies and firm strategy in markets for medicines this paper empirically examines the consumer welfare implications of changes in government policies related to patent protection and compulsory licensing in the indian market for oral anti diabetic oad medicines in contrast to previous studies on the impact of pharmaceutical patents in india we observe and estimate the welfare effects accruing from differential pricing and voluntary licensing strategies of patent holding innovator firms three novel molecules belonging to the dipeptidyl peptidase 4 dpp 4 inhibitor class of oads have been launched in india by the patent holders at lower prices than those prevailing in the developed countries using aggregate market transaction data we structurally estimate demand and supply and use the parameter estimates in our model to simulate consumer welfare under various counterfactual scenarios our results suggest that the introduction of dpp 4 inhibitors generated a consumer surplus gain of around 7 6 cents per day for a typical dpp 4 inhibitor user under the existing differential pricing and voluntary licensing strategies if the innovators decide to price at developed country levels this surplus is eliminated almost entirely the issuance of compulsory licensing does not always improve consumer welfare because if innovators defer or delay the introduction of new drugs in response the loss in consumer welfare could be substantial