1,721,233 research outputs found
Some unintended consequences of parallel trade in pharmaceuticals
No full textIt is widely argued that international arbitrage, or parallel trade (PT), in patented drugs may increase consumer surplus in the relevant countries but at the expense of R&D investment. We show how the effects of PT depend on the vertical contract (linear pricing or dual pricing) between the manufacturer and the foreign licensee or distributor and on whether and how drug prices are regulated and reimbursed. We find that, contrary to what policy makers generally predict, we should be more concerned with the impact of PT on aggregate consumer surplus than on R&D investment
Drug innovation, price controls, and parallel trade
No full textWe study the long-run welfare effects of parallel trade (PT) in pharmaceuticals. We develop a two-country model of PT with endogenous quality, where the pharmaceutical firm negotiates the price of the drug with the government in the foreign country. We show that, even though the foreign government does not consider global R&D costs, (the threat of) PT improves the quality of the drug as long as the foreign consumers’ valuation of quality is high enough. We find that the firm’s short-run profit may be higher when PT is allowed. Nonetheless, this is neither necessary nor sufficient for improving drug quality in the long run. We also show that improving drug quality is a sufficient condition for PT to increase global welfare. Finally, we show that, when PT is allowed, drug quality may be higher with than without price controls. © 2016, Springer Science+Business Media New York
Market integration and vertical relationships under asymmetric information. An analysis of parallel trade
No full text
“Proprietà intellettuale e politiche di regolamentazione in presenza di arbitraggio internazionale”
No full textVertical structures and opportunistic behaviour in international markets. An analysis of parallel trade
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