campaign contributions and congressional voting a simultaneous probit tobit model m any citizens and scholars have been troubled by the influence that special interest groups appear to exert over policymaking as a result of their roles in the financing of political campaigns these concerns inspired the enactment of a number of election law reforms in the 1970s and have led to increasing popular support for public financing of electoral campaigns despite the public attention these issues have attracted few social scientists have attempted to analyze the financial relationships between interest groups and policymakers empirically 1 one such study was reported by durden and silberman 1976 who included contributions from the afl cio political action committee as an independent variable in an equation explaining congressional voting on minimum wage legislation their results indicated that campaign contributions significantly affected voting on that issue the work i have done differs substantially from that of durden and silberman in two ways first i have chosen to examine issues which were of considerably narrower concern than the minimum wage issue in the interest of simplicity i examine issues of concern to just one or a few groups i have also used a different econometric technique if campaign contributions are actually endogenous as seems plausible the single equation estimation technique employed by durden and silberman is subject to a possible simultaneous equations bias for each issue studied i have therefore jointly estimated a two equation system explaining both votes on the bill and contributions from an associated interest group the simultaneous probit tobit model which i use takes into account the dichotomous nature of the variable indicating a congressman s vote the non negativity constraint imposed on the contribution variable and the possibility of correlation between the error terms for the equations explaining these two variables 2 full information maximum likelihood fiml estimates for the model are consistent and asymptotically efficient

direct estimation of synergy a new approach to the diversity performance debate this study examines the linkages between relatedness and synergy in the context of diversification among u s pharmaceutical firms for the period 1960 1980 rather than assume as in the entropy herfindahl and concentric indices of diversification that the levels of synergy generated by different related combinations of business units are identical we estimate synergy directly using a modified version of the concentric index in addition to estimating synergy using capital market performance of the firm as a whole we examine the effects of nondrug diversification on the innovative productivity of firms pharmaceutical divisions alone our two main findings are that production relatedness such as that between drugs and chemicals in fact did not imply synergy over the period of our study and that the patterns of synergy for different types of relatedness shifted over time with the industry life cycle

introduction to the special issue on the world food crisis this issue of agricultural economics contains articles on the causes and effects of rising food prices all papers were subject to full double blind peer review on an accelerated basis in an effort to publish the best new research as quickly as possible we received more than 60 submissions referees were given three weeks to respond and authors of candidate papers had an additional week to revise their work before final acceptance articles published use descriptive econometric and simulation methods for both global overviews and case studies

asymmetric international minimum quality standards and vertical differentiation this paper develops a two country model of a vertically differentiated duopoly that spans two countries which are not integrated without additional costs equilibrium qualities prices profits and consumer s surplus are compared when 1 minimum quality standards are identical and 2 standards differ across countries both markets turn out to be connected by the quality choices of the two firms both firms prices in the two countries and their profits are lower whereas consumer s surplus and the two offered qualities are higher in both countries if no firm is forced out of the country s market with the more demanding minimum quality standard copyright 1995 by blackwell publishing ltd

the impact of the global food crisis on self assessed food security the paper provides the first large scale survey based evidence on the impact of the global food crisis of 2007 08 using an indicator of self assessed food security from the gallup world poll for the sampled countries as a whole this subjective indicator of food security remained the same or even improved seemingly owing to a combination of strong economic growth and limited food inflation in some of the most populous countries particularly india however these favorable global trends mask divergent trends at the national and regional levels with a number of countries reporting substantial deterioration in food security the impacts of the global crisis therefore appear to be highly context specific

the dynamics of technological innovation the sector of antibacterial medicines abstract this is an empirical and historical study of the dynamics of technological innovation in antibacterial medicines a key sector of the pharmaceutical industry it is based on an analysis of all the innovations that were introduced over the period 1935 1987 from prontosil the first sulphonamide through penicillin and the semisynthetic antibiotics to the monobactams and the quinolones of the mid 1980s in the historical section we describe the influence that antibacterial medicines have had on the structure and research intensity of the innovating companies and through them on the pharmaceutical industry and its geography we also describe the catalytic role played by government agencies and universities in the empirical section the innovations are evaluated in terms of originality and market performance and are classified into four technological trajectories their distribution over time and among technological trajectories companies and countries the relation between originality and market performance of individual innovations the interplay between social needs market demand and technological innovation the role of market successful radical innovations in the launching of technological trajectories the orientation of subsequent academic and industrial research and the establishment of corporate technology traditions provide insights in both innovation theory and the dynamics of technological innovation

lessons from the united states s antitrust history abstract the united states s antitrust policy spans more than 100 years for most of its history the united states has had the toughest antitrust laws and enforcement policies of any country in the world a shift to a more permissive attitude with regard to antitrust matters has occurred in recent years however this paper traces the changes in antitrust policy that have occurred and the concurrent shifts in thinking among economists on antitrust questions following this review the paper offers a critical appraisal of both the economic underpinning of the new learnings on antitrust matters and the changes in antitrust policy that have accompanied them it closes with a discussion of the implications of the analysis for european antitrust competition policy

pioneers imitators and generics a simulation model of schumpeterian competition a computer simulation model in the tradition of evolutionary models of technical change is developed in this paper it focuses on r d competition in new product introductions and is based on data for the u s pharmaceutical industry during the 1970s the sensitivity of innovation levels to the rate of generic competition regulatory review time and patent life is examined in the computer simulation experiments these factors are found to have significant long run effects on industry structure and innovation levels

capture and ideology in the economic theory of politics the economic theory of regulation long ago put public interest theories of politics to rest these theories have correctly been viewed as normative wishings rather than explanations of real world phenomena they have been replaced by models of political behavior that are consistent with the rest of microeconomics anthony downs 1957 james buchanan and gordon tullock 1965 george stigler 1971 sam peltzman 1976 recently however debate has arisen over whether some version of a public interest theory of regulation will have to be readmitted to our thinking about actions and results in the political arena what is at issue is the empirical importance of the altruistic publicly interested goals of rational actors in determining legislative and regulatory outcomes james kau and paul rubin 1979 kalt 1981 peltzman 1982 this study assesses the nature and significance of publicly interested objectives in a particular instance of economic policymaking u s senate voting on coal strip mining regulations the existence of such objectives is of course no contradiction of the economic view of human behavior kenneth arrow 1972 gary becker 1974 and may well be rooted in genetic biological history becker 1976 jack hirshleifer 1978 generally however individuals altruistic publicly interested goals have been given little attention this reflects the judgment that such goals are so empirically unimportant as to allow the use of occam s razor in positive models or well founded apprehensions that these goals are unusually difficult to identify measure and analyze notwithstanding the latter problem we find that approaches which confine themselves to a view of political actors as narrowly egocentric maximizers explain and predict legislative outcomes poorly the tracking and dissecting of the determinants of voting on coal strip mining policy suggest that the economic theory of politics has been prematurely closed to a broader conception of political behavior

the spatial dimension of us house prices spatial heterogeneity and spatial dependence are two well established aspects of house price developments however the analysis of differences in spatial dependence across time and space has not gained much attention yet this paper jointly analyses these three aspects of spatial data a panel smooth transition regression model is applied that allows for heterogeneity across time and space in spatial house price spillovers and for heterogeneity in the effect of the fundamentals on house price dynamics evidence is found for heterogeneity in spatial spillovers of house prices across space and time house prices in neighbouring regions spill over more in times of increasing neighbouring house prices then when neighbouring house prices are declining this is interpreted as evidence for the disposition effect moreover heterogeneity in the effect of the fundamentals on house price dynamics could not be detected for all variables real per capita disposable income and the unemployment rate have a homogeneous

examining the link between food prices and food insecurity a multi level analysis of maize price and birthweight in kenya in developing countries where many poor people rely on rainfed locally produced food for the majority of their caloric intake shifts in climate and weather patterns can dramatically reduce agricultural productivity the reduction in agricultural productivity reduces overall food availability and ultimately impacts food accessibility putting millions of people at risk for malnutrition in this project we focus on kenya where roughly a third of households are food insecure we examine the relationship of the price of maize and low birth weight to help quantify the impact of local food prices on one outcome of household food insecurity using spatially referenced data from recent kenyan demographic and health survey datasets price data livelihood information and a remotely sensed based measure of local growing season productivity we develop a dataset linking pregnancies occurring from 2001 to 2008 to the spatially and temporally relevant maize price data we construct several regression models to examine the impact of local maize prices and remotely sensed based estimates of crop production on infant birth weight specifically low birth weight the results of the models highlight the importance of including community crop production to evaluate maize price impacts on low birth weight outcomes also because of the positive correlation between pre pregnancy maize prices and birth weight the results suggest that some households may benefit from high prices or that high prices may impact the number of conceptions more generally our work demonstrates that multilevel models that account for community level variation are important for disentangling these complex relationships and can contribute to the discussion of how to design more effective food policies

present at the biotechnological revolution transformation of technological identity for a large incumbent pharmaceutical firm abstract management of successful incumbent firms experience difficulty in recognizing the need for and effecting change in the firm s technological identity after an externally generated shift in the industry s technological trajectory nonetheless some large pharmaceutical firms have transformed their technological identity in drug discovery from a chemical random screening to biological drug design model we report how one of the world s most successful incumbents transformed technically sophisticated senior management championed the transformation it was achieved primarily through hiring many new scientists embodying biotechnology existing personnel acquired the expertise or left continual self transformation is part of the corporate ethos some differences in incumbent and entrant technology remain incumbents use a wider range of techniques consistent with their complementary assets publication and incentive compensation policies are driven by the need to attract and retain the best scientists professor firm collaborations are ubiquitous often non public and best identified in quantitative analyses by co publishing collaborations with new biotechnology firms are used primarily to substitute for developing internal expertise judged of marginal value no drug discovery collaborations exist with other major incumbents we identify another seven or eight incumbents similarly transforming as indicated by top scientific talent and patenting success

why are african commodity exchanges languishing a case study of the zambian agricultural commodity exchange abstract food price volatility and high transactions costs remain major problems in african food markets these persistent problems provide a strong theoretical justification for the development of commodity exchanges however the majority of african commodity exchanges remain underdeveloped through a case study of the zambian agricultural commodity exchange zamace this article explores why agricultural commodity exchanges in the region have thus far failed to develop into sustainable trading platforms and identifies the most important changes needed to enhance their performance drawing on interviews and group discussions with the primary participants on zamace five main factors that impede volumes traded on the zamace exchange are identified and analyzed 1 the limited success in attracting financial institutions commitment to commodity exchanges 2 the anonymous nature of trading on a commodity exchange exacerbates the risks associated with contract non compliance and opportunistic behavior 3 the potential for conflict of interest among brokers 4 the potential for market manipulation in a thinly traded market and 5 the high fixed costs that are imposed on actors trading in a thin market exacerbating all these factors is the unpredictability of government intervention in cereal markets

equity and time to sale in the real estate market evidence from the boston condominium market of the early 1990s reveals that an owner s equity position determines his experience as a seller an owner of a property with a high loan to value ratio sets a higher asking price has a higher expected time on the market and if he sells receives a higher price than an owner with proportionately less debt the down payment requirement for purchasers but not incumbent owners provides a simple explanation for this phenomenon among owner occupants the results provide supporting evidence for equity based aggregate theories of price volume movements in the housing market copyright 1997 by american economic association

discontinuities and senior management assessing the role of recognition in pharmaceutical firm response to biotechnology despite an increasing emphasis on the role of senior management cognition in shaping organizational action there have been few attempts to link top management mental models to strategic choice in the face of discontinuous innovation this paper uses 23 years of data covering 15 major pharmaceutical firms to explore the degree to which each firm s response to the revolution in biotechnology was shaped by the senior team s recognition of biotechnology s importance controlling for a number of important alternative explanations we show that recognition may be an important predictor of action suggesting that cognition at the most senior level can play a critical role in shaping established firms response to discontinuities copyright 2003 oxford university press

formal institutions and social capital in value chains the case of the ethiopian commodity exchange we explore whether the creation of the ethiopian commodity exchange ecx and its formal monitoring and enforcement institutions has affected social capital and trust in the ethiopian segment of the sesame value chain consistent with a simple theoretical marketing model our panel data suggest this is indeed the case trade in sesame is increasingly governed by formal rather than informal institutions and in response traders have broadened their trading network rely more frequently on traders with whom they do not have social relations and have reduced the provision of credit that cements personalized relationships they also have lower levels of trust in the intentions and capabilities of their trading partners and attach less weight to trust

measuring the influence of space and time effects on time on the market this paper is concerned with spatial effects of time on the market for residential property and time varying relationships using a dataset of properties from the adelaide metropolitan area australia during the period 2002 2011 the analysis firstly considers the spatial dependence in time on the market and secondly extends the analysis to a space time model using 2sls regression the findings demonstrate the complexity in spatial analysis with results indicating a random distribution of time on the market in 86 of observations a pattern that is consistent over time spatial autocorrelation is shown to increase time on the market in the subject property while spatial error decreases time on the market in the subject property suggesting a high level of market transparency and improved liquidity the compensating or nullifying effects of both types of spatial association is shown to contribute to the random distribution observed in time on the market a strong explanatory capacity of the business cycle suggests that economic drivers are leading time on the market rather than prices abstract from author

food marketing and pricing policy in eastern and southern africa a survey abstract this article surveys the empirical record of grain marketing and pricing policy in eastern and southern africa over 1930 1995 the paper addresses five key issues with major implications for food policy throughout africa a why the anticipated supply response to market liberalization has not yet occurred b why the common assumption of state taxation of farmers to support a cheap food policy does not apply in most of the countries in the region c why the temporary successes of the state led approach to stimulating smallholder grain production were unsustainable d why the elimination of government food subsidies associated with market reform has not adversely affected consumers and e why the fiscal cost of the marketing systems at least initially worsened rather than improved after the reforms were implemented in most countries the key future challenges for marketing policy are how to develop coordinated and financially sustainable input finance and commodity marketing systems for raising productivity growth in smallholder agriculture while overcoming inherited agricultural dualism and how to mitigate the effects of food price instability in a cost effective manner

consumer response to maize market liberalization in urban kenya abstract the elimination of consumer food subsidies associated with structural adjustment in africa has been widely thought to exacerbate food insecurity for low income consumers this article determines how urban maize consumption and expenditure patterns have responded to the liberalization of the maize and maize meal markets in kenya the article decomposes changes in maize meal prices attributable to changes in maize grain prices and maize milling margins results are obtained through two random household surveys in nairobi the first having been conducted before and the second after liberalization the main finding of the study is that maize market liberalization has conferred substantial benefits to urban consumers the combined saving to nairobi consumers from lower maize milling costs has been roughly us 10 1 million each year about the same amount that the government of kenya allocates annually to agricultural research results also indicate that the former consumer subsidies conferred through the official marketing channel were untargeted and actually inversely related to household income the subsidies on sifted meal also served to entrench a non competitive market structure that inhibited the development of a lower cost informal milling system these findings are consistent with research results from other eastern and southern african countries showing that the negative effects of eliminating food subsidies in the state marketing system have been largely compensated by relaxing controls on private grain trade which has increased consumers access to less expensive grain products distributed through informal markets

bureaucratic discretion or congressional control regulatory policymaking by the federal trade commission this paper extends stigler and peltzman s approach to regulation by incorporating a legislature the model yields comparative statics results and hence testable implications the paper then tests between two opposing approaches about regulatory agency behavior the first assumes agencies operate independently of the legislature and hence exercise discretion the second assumes that congress controls agency decisions the recent behavior of the federal trade commission provides the empirical setting substantial evidence is found for the specific predictions of the model including the hypothesis of systematic congressional influence over ftc decisions

product line expansion and resource cannibalization abstract diversification research argues that new products are more successful when they leverage a firm s intangible resources which may support multiple activities without engendering rivalry for their use however numerous complementary resources may also be needed to exploit a firm s intangibles if these resources are in limited supply or if it takes time to acquire and assimilate additional resource capacity then new products may impose costs on existing products by cannibalizing the services of firm resources our analysis of product introductions within the pharmaceutical industry provides evidence of resource cannibalization and suggests that product market experience helps offset some of these costs

higher fuel and food prices impacts and responses for mozambique rising world prices for fuel and food represent a negative terms of trade shock for mozambique the impacts of these price rises are analyzed using various approaches detailed price data show that the world price increases are being transmitted to domestic prices short run net benefit ratio analysis indicates that urban households and households in the southern region are more vulnerable to food price increases rural households particularly in the north and center often benefit from being in a net seller position longer term analysis using a computable general equilibrium cge model of mozambique indicates that the fuel price shock dominates rising food prices from both macroeconomic and poverty perspectives again negative impacts are larger in urban areas the importance of agricultural production response in general and export response in particular is highlighted policy analysis reveals difficult trade offs between short run mitigation and long run growth improved agricultural productivity has powerful positive impacts but remains difficult to achieve and may not address the immediate impacts of higher prices

the developing world is poorer than we thought but no less successful in the fight against poverty a new data set on national poverty lines is combined with new price data and almost 700 household surveys to estimate absolute poverty measures for the developing world we find that 25 of the population lived in poverty in 2005 as judged by what poverty typically means in the world s poorest countries this is higher than past estimates substantial overall progress is still indicated the corresponding poverty rate was 52 in 1981 but progress was very uneven across regions the trends over time and regional profile are robust to various changes in methodology though precise counts are more sensitive

putting the 2007 2008 global food crisis in longer term perspective trends in staple food affordability in urban zambia and kenya abstract staple food prices in cities in eastern and southern africa rose sharply between late 2007 and early 2009 leading to estimates of massive increases in food insecurity and hunger however in assessing the impacts of soaring food prices on urban consumers access to food it is important to consider food price changes relative to changes in per capita incomes in this study we use the case studies of zambia and kenya where data are available on food prices wage rates incomes and other indicators of urban purchasing power to answer two main questions i how did staple food purchasing power at the height of the food price crisis compare to levels over the last 15 years and ii did the food price crisis exacerbate an already declining trend in staple food purchasing power or did it reverse a trend of stable or improving staple food affordability results indicate that staple food purchasing power in urban zambia and kenya improved markedly in the 10 12 years prior to the food price crisis most measures of bread and maize meal affordability at the start of the crisis in 2007 were at levels 1 0 4 3 times higher than in the mid 1990s these gains for urban consumers were slashed but not completely reversed during the food crisis between 2007 and 2009 maize meal and bread were still more affordable in urban zambia than all periods between 1994 and 2003 in urban kenya staple food purchasing power as of 2008 2009 was comparable to levels in 2000 2001 2004 2005 according to some indicators while other measures suggest that the food price crisis reduced staple food purchasing power to levels lower than any other year in the period 1994 1995 2007 2008

estimating the short run poverty impacts of the 2010 11 surge in food prices global food prices have increased substantially since mid 2010 as have prices in many developing countries in this study we assess the poverty impact of the price changes between june and december 2010 in twenty eight low and middle income countries this is done by gathering detailed information on individual households food production and consumption levels for thirty eight agricultural and food commodities to assess the impacts on household welfare this study estimates that this sudden food price surge increased the number of poor people globally but with considerably different impacts in different countries the heterogeneity of these impacts is partly related to the wide variation in the transmission of global prices to local prices and partly to differences in households patterns of production and consumption on balance the adverse welfare impact on net buyers outweighs the benefits to net sellers resulting in an increase in the number of poor and in the depth of poverty we estimate that the average poverty change was 1 1 percentage points in low income countries and 0 7 percentage points in middle income countries with a net increase of 44 million people falling below the 1 25 per day extreme poverty line

the roles of developer s status and competitive intensity in presale pricing in a residential market a study of the spatio temporal model in hangzhou china this study investigates the roles of developer s status and competitive intensity in presale pricing in residential markets the study examines various competitive factors in hangzhou china within a spatial temporal framework these factors include competitive intensity and developer s status plus two independent variable groups external attributes and project features to overcome the shortcomings of traditional valuation methods the estimation makes use of spatial and temporal data via three different approaches they are the geographically and temporally weighted regressions gtwr spatial temporal hedonic model sthm and spatial temporal autoregressive model star the analysis reveals that there exists spatial and temporal dependence in the hangzhou real estate market not only does this study provide new findings and a better understanding of the factors affecting presale pricing but it also offers valuable implications about competitive intensity for policymakers and urban planners in the

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

advertising and competition in the ethical pharmaceutical industry the case of antihypertensive drugs abstract this paper uses data on the majority of name brand antihypertensive drugs marketed in the united states during 1988 93 to test the hypothesis that advertising decreases the price elasticity of demand in the pharmaceutical industry this is the first study to directly estimate the effects of drug product promotion on the price elasticity of demand in this industry we find strong evidence of an advertising effect in particular detailing efforts the salient means for product promotion in this industry systematically lower price sensitivity given the inverse relationship between elasticity of demand and price it is likely that consumers pay higher prices as a result of the advertising that occurs in this industry our findings are thus consistent with hurwitz and caves who find evidence that advertising inhibits entry into this market but in contrast to earlier research that found no anticompetitive effect

the effects of ncpb marketing policies on maize market prices in kenya the government of kenya pursues maize marketing policy objectives through the national cereals and produce board ncpb which procures and sells maize at administratively determined prices and stores maize as a contingency against future shortages a private sector marketing channel competes with the ncpb this article estimates the effects of ncpb activities on the historical path of private sector prices in kenyan maize markets between 1989 and 2004 the analysis is carried out using a reduced form vector autoregression model var estimated with sparse data and imposing only minimal identification restrictions results show that ncpb activities have stabilized maize market prices in kenya reduced price levels in the early 1990s and raised average price levels by roughly 20 between 1995 and 2004 over the past decade the price raising activities of the ncpb have transferred income from urban consumers and a majority of small scale farm households that are net buyers of maize to a relatively small number of large and small scale farmers who are sellers of maize

pricing dynamics in the pharmaceutical industry pricing behaviour has traditionally been approached from the concept of long term static equilibrium this paper argues that this approach is inappropriate at least with respect to the pharmaceutical market because new innovation and patent expiry lead to a continually changing environment a theoretical analysis argues that price change will depend on the age of the therapeutic class the degree of brand loyalty the extent to which it is sold over the counter rather than on prescription and measures of competition the empirical results based on an analysis of the leading twenty five therapeutic class of pharmaceuticals in the usa the uk west germany and france over the period 1981 1988 tends to support the theoretical conclusions although it would appear that government controls in the uk are distorting profit maximizing behaviour more than in the other three countries

pricing profits and technological progress in the pharmaceutical industry the decades old debate over pharmaceutical industry prices profits and innovation has again intensified a number of events coalesced to refocus public interest on pharmaceuticals contributing to public concern were bureau of labor statistics price index increases for pharmaceuticals far outpacing those for the products of other industries another prominent characteristic of the pharmaceutical industry has been its extraordinarily high reported profitability this article examines the phenomena that precipitated the current pharmaceuticals debate their historical antecedents and the principal questions at issue in the author s considered judgment a pell mell march toward regulation of pharmaceutical industry pricing could seriously impair the industry s incentives for investment in new products

political influence and regulatory policy the 1984 drug legislation i introduction in the late 1970s and early 1980s dissatisfaction with the length complexity and cost of the drug approval process combined with rising prescription drug prices led to congressional attempts at reform these focused on two issues to compensate the developers of new drugs for the increasing costs and delays associated with fda approval and to increase the availability of generic drugs until 1984 these reform attempts failed i use the structure induced equilibrium sie theory of shepsle and weingast 1981 to examine why regulatory reforms prior to 1984 were stalemated and why the 1984 drug legislation was ultimately enacted my results show that prior to 1984 the preferences of the members of the key congressional committees were such that the proposed bills could not beat the status quo however changes in both membership and turnover on the house subcommittee on health and the environment combined with a change in the majority party in the senate led to a situation in which the 1984 drug legislation could defeat the status quo in both the house and the senate the drug price competition act facilitated the market entry of generic drugs following patent expiration by allowing generic versions of brand name drugs patented after 1962 to use an abbreviated new drug application anda 1 the patent term restoration act extended the patent lives of brand name drugs for up to five years to compensate for patent life lost during the fda approval process initial unsuccessful legislative reforms were introduced into congress in 1978 79 and 1981 82 but no legislative reforms were passed until 1984 these earlier unsuccessful reform efforts raise the following questions first why did the status quo prevail until 1984 as the legislative equilibrium second what endogenous changes occurred to produce the new legislative equilibrium in 1984 while much of the previous literature about the pharmaceutical industry has focused on the efficiency and distributive effects of public policy i focus on the theory of regulatory policy 2 the sequence of legislative actions leading to the 1984 drug legislation shows how competing interest groups representing brand name and generic drug firms forced legislators to face trade offs in accommodating their interests i look most closely at the members of the house and senate committees with jurisdiction over pharmaceutical regulation issues data representing brand name and generic firm or consumer interests are used to construct estimates of legislative preferences ideal points 3 then the sie theory is used to generate predictions about legislative behavior and outcomes to help explain the initial failure of regulatory reform in 1979 and its ultimate success in 1984 the results from the analysis explain both why the status quo prevailed in 1979 and why it was overturned in 1984 the analysis also illustrates how the industry and consumer groups represented on the relevant committees can protect their interests this occurred in both 1979 when the senate passed legislation favorable to the generic drug industry and 1981 when legislation supported by the brand name drug firms was passed in each case representatives of the unfavored interest group were able to block legislation in the house legislation was possible only when the majorities on the house and senate committees could agree on a single policy which could defeat the status quo in both committees moreover this policy provided benefits to both sets of industry interests represented by committee members the paper is organized as follows in sections ii and iii i describe the theory of political outcomes used in this analysis and provide some background on pharmaceutical regulation prior to the reforms the estimation of congressional ideal points is discussed in section iv sections v and vi examine congressional responses to the 1979 drug reforms and interest group activity in the 1980s

estimating neighbourhood effects in house prices towards a new hedonic model approach a hedonic equation considers ols models with independently and identically distributed errors however quality of property and location tend to exhibit highly auto regressive correlation due to spatial dependence and heterogeneity a modification is made to multiple regression analysis based on the land rent concept so that the modified hedonic house price function can be determined this paper develops a stochastic approach which is able to correct autocorrelation bias in the hedonic function others tend to model the spatial autocorrelation through the error terms while this study models it through the constant term the sample was orientated by location to reflect the neighbourhood effects thus the neighbourhood effects can be separated from the random disturbance our model using data from hong kong incorporates adjustments reflecting net floor area ratio age floor level views transport accessibility and amenities such as availability of recreational facilities the stochastic model is a more

the measurement of intellectual property rights protection this research improves upon empirical studies that examine the measurement of intellectual property rights ipr protection prior measures examine only one type of law or lack a component that addresses the actual enforcement of these laws the measure presented here uses three types of ipr laws and enforcement components for them

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

the relative impact of actual and potential rivalry on firm profitability in the pharmaceutical industry this paper estimates the effects of actual and potential rivalry on profitability of firms in the u s pharmaceutical industry during the 20 year period 1963 82 the results show that during the 1960s actual rivalry among the sampled firms did not materially affect firm profitability but that during the 1970s competition among incumbents had an increasingly adverse effect on their profitability the results also show that potential competition significantly reduced drug firms profitability during the entire 20 year period copyright 1999 john wiley sons ltd

implicit house prices variation over time and space in spain asking price has a fundamental influence on market behaviour and understanding how attributes affect the perceived price of housing this paper employs a large database of houses from the spanish housing market to estimate the role of attributes in asking price formation star methodology and glm with random effects are used to extract the price of attributes and the spatial and time pattern results show that the pricing of attributes varies by geographical region and over time with property size and economic and demographic attributes being the key variables explaining asking price formation

the dynamics of technological innovation the case of the pharmaceutical industry abstract this paper examines the mechanisms and dynamics of the process of innovation in companies and sectors of the chemical industry it is based on analysis of science and technology output indicators namely patents and innovations evaluated in terms of originality and in the case of innovations in terms of market success as well radical innovation ri is identified as the kingpin for the evolution of technologies in both the micro and macro economic context not only because it provides a model for imitation but also because it turns out to be more profitable for the innovating companies than incremental innovation at the micro economic level this paper examines the significance of diverse driving forces which lead a company to the launching of projects aiming at ri measures the length of commitment to such projects and describes the dynamic effects generated by the introduction of a successful ri and how they affect the company s subsequent r d and market orientation at the macro economic level this paper identifies the stages of youth growth maturity and decline of the subsectors of the chemical industry examines the distribution of ri and market successful innovations over the development of a sector describes the influence of market demand and capital investment on technological advance and compares the development of national chemical industries the paper concludes with an account of the dynamics of technological innovation in the chemical industry over the period 1930 1985 which is based on the empirical findings of the previous sections

generic entry price competition and market segmentation in the prescription drug market abstract this paper studies the effects of generic entry on post patent price competition for 18 prescription drugs recently exposed to competition an independent validating test of the generic competition paradox is conducted using a newly created data set each generic entrant is associated with an average 1 increase in the branded price the one way error component model accounts for intermolecular competition market segmentation and endogeneity of entry and finds branded prices increasing by 2 alternative definitions of entry suggest that price competition is confined to the generic market the unique payer type feature of the data offers empirical evidence supporting market segmentation

the optimal organization of research evidence from eight case studies of pharmaceutical firms abstract in this paper we examine the results of interviews of scientists and executives in eight pharmaceutical companies on the issue of how best to organize the rd when the firm is playing catch up in an area of science where it is weak and when governmental policies force firms to carry out r d in particular locations

products liability and prescription drug prices in canada and the united states this article provides the first estimate of the degree to which product liability costs in this country contribute to the observed differences in pharmaceutical prices between the united states and canada measures of liability risk show up as large and strongly significant explanatory variables in regressions of u s and canadian price differences in the sample used here accounting for liability effects reduces the mean of the predicted price difference distribution by about one half and the median by about one third these reductions come about by virtually eliminating the upper tail of the distribution though liability effects cannot account for all the observed price differences in this sample they clearly must play a role efforts to explain international price differences in drug products which do not take account of the effects of differing legal systems are missing an important effect and suffer from a substantial omitted variable bias

three bubbles and a panic an explanatory review of recent food commodity price events abstract this paper is a summary of the behaviour of food commodity prices in 2007 2008 and a review of the causes of the price increases extracted from a report to the chief scientific advisor to her majesty s government thirtle c piesse j 2008 an explanatory review of the world food commodity price events of 2007 2008 a report to the chief scientific advisor department for innovation universities and skills london the historical background shows that the price spike was much less severe than in the 1970s the conventional wisdom that prices of the main food commodities were falling prior to 2006 is questioned most ceased falling and were quite stable from the 1980s the paper separates the causes of the spike from the underlying changes driving the long run trends the literature on the causes of the spike is critically reviewed and summarised there is a reasonably broad consensus on most of the causes but much less on the impact of the depreciation of the us dollar there are also concluding speculations on the future

rice prices and income distribution in thailand a non parametric analysis rice is a staple crop in thailand significantly entering both household production and consumption this paper examines the effect of rice prices on the distribution of real income across households taking into account household characteristics and geographical location the data set is a large scale survey of 11 893 households simple nonparametric techniques for regression and density estimation are used these methods depend on few assumptions and generate flexible graphical results that are directly informative about the problem at hand the main results are that higher rice prices should benefit all rural households but the largest benefits accrue to rural households in the middle of the income distribution copyright 1989 by royal economic society

the tylenol incident ensuing regulation and stock prices the much publicized tylenol incident in 1982 led to stringent packaging regulations for over the counter pharmaceutical drugs the sudden incident and the swift progression of associated events offer a unique opportunity to assess the wealth effects of the resultant regulations the market value of common stock of johnson johnson makers of tylenol declined by approximately 29 percent amounting to 2 31 billion although other firms in the industry also suffered significantly their share price decline did not occur around the tylenol incident but occurred around the subsequent packaging reg ulation proceedings on average 28 other pharmaceutical firms analyzed in this study experienced a decline of 310 million per firm or a total of about 8 68 billion the results suggest that the regulation had a significant negative effect on the common stock prices of firms in the pharmaceutical industry

estimating the impact of the r d tax credit on strategic groups in the pharmaceutical industry abstract the economic recovery and tax act of 1981 provided a 25 percent tax credit for increases in research and experimentation expenditures previous studies have shown considerable controversy about the effectiveness of various tax credits this study focuses on the response of the strategic groups in the pharmaceutical industry to the credit four strategic groups were formed using different levels of research intensity research sales and relative cash flow margin cash flow sales the change in research intensity following enactment of the tax credit was estimated the analysis found that the tax credit caused an increase in r d expenditures in addition the r d tax credit appears to have contributed to increased competitive r d spending among the firms in the pharmaceutical industry

product innovation product market competition and persistent profitability in the u s pharmaceutical industry increasingly strategy scholars are exploring the relationships between innovation competition and the persistence of superior profits sustained high profitability may result when a firm repeatedly introduces valuable innovations that service previously unmet consumer demands while the returns to the firm from each innovation may erode over time innovation ensures that overall the firm maintains a high performance position at the same time sustained high profitability may also accrue to firms that innovate less often but effectively avoid the competition that otherwise erodes high returns this paper elaborates these relationships before presenting an empirical analysis of the effects of differential innovative propensities and differential rates of competition on pharmaceutical firms abilities to sustain profit outcomes that are above those earned by competing firms the analysis which is situated within the u s pharmaceutical industry finds support for the expected relationship between high innovative propensity and sustained superior profitability but no support for a link between persistence and the ability to avoid competition copyright 1999 john wiley sons ltd

practical implications of game theoretic models of r and d the purpose of this paper is to survey recent game theoretic models of research and development and to ask whether they yield practical implications or testable hypotheses the papers i will be discussing have been written or published within the past five years they have a good deal in common relying upon similar assumptions and building upon each other because of this the literature surveyed here may seem narrow and some relevant work has probably been inadvertently omitted i apologize for these omissions for want of space i will not discuss the normative conclusions of this literature

implications of higher global food prices for poverty in low income countries in many poor countries the recent increases in prices of staple foods raise the real incomes of those selling food many of whom are relatively poor while hurting net food consumers many of whom are also relatively poor the impacts on poverty will certainly be very diverse but the average impact on poverty depends upon the balance between these two effects and can only be determined by looking at real world data results using household data for ten observations on nine low income countries show that the short run impacts of higher staple food prices on poverty differ considerably by commodity and by country but that poverty increases are much more frequent and larger than poverty reductions the recent large increases in food prices appear likely to raise overall poverty in low income countries substantially

the political economy of the pharmaceutical industry e conomicsis a practical science since its inception as an independent discipline it has probed the major policy issues of the day the topics that aroused the interests of its practitioners have generally been those that presented government officials with critical choices the modern literature on the economics of the pharmaceutical industry is no exception this body of material originated with the investigations of the kefauver committee in late 1959 public interest was aroused by the spectacle of confrontation between committee and industry the record made by this committee and its successors grew to tens of thousands of pages as claims and counterclaims were offered regarding industry conduct and performance the primary line of attack concerned pharmaceutical prices and profits the committee demonstrated that prices generally exceeded direct costs of manufacturing for 22 major pharmaceutical firms in 1958 costs of goods sold were merely 32 percent of total sales u s senate report 1961 p 31 the committee argued that this fact alone demonstrated the presence of monopoly power while the substantial difference between revenues and production costs permitted high expenditures on research and development it also paid for even higher selling outlays moreover reported rates of return after taxes during this period on the order of 21 to 22 percent exceeded twice the average for all manufacturing the industry replied that on the contrary prices were low relative to the value afforded consumers and high returns on successful products were required to balance the losses from the large numbers of unsuccessful ones the relevant concept of marginal costs according to the industry position must include the costs of developing and marketing new products and therefore prices were not excessive at all although it admitted earning substantial profits the industry argued that without these returns research outlays would be limited and the number of new drugs reduced the committee countered that little of social value arose from industry research molecules were manipulated and the new drugs that resulted were therapeutically similar to those already on the market indeed it suggested that much