Multimarket Contact in Pharmaceutical Markets
AbstractThe purpose of this paper is to analyze the effect of multimarket contact on the behavior of pharmaceutical firms controlling for different levels of regulatory constraints using IMS MIDAS database. Theoretically, firms that meet in several markets are expected to be capable of sustaining implicitly more profitable out- comes, even if perfect monitoring is not possible. Firms may find it profitable to redistribute their market power among markets where they are operating. We present evidence for nine OECD countries with different degrees of regulation and show that regulation affects the importance of economic forces on firms' price setting behavior. Furthermore, our results confirms the presence of the predictions of the multimarket theory for more market friendly countries (U.S. and Canada) and less regulated ones (U.K., Germany, Netherlands), in contrast, for highly regulated countries (Japan, France, Italy and Spain) the results are less clear with some countries being
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Bibliographic InfoPaper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 698.07.
Date of creation: 20 Apr 2007
Date of revision: 18 Jul 2007
Pharmaceutical prices; Multimarket Contact; Regulation;
Other versions of this item:
- Javier Coronado & Sergi Jiménez Martín & Pedro L. Marín, 2008. "Multimarket Contact in Pharmaceutical Markets," Working Papers 2008-20, FEDEA.
- Javier Coronado & Sergi Jiménez-Martín & Pedro L. Marín, 2007. "Multimarket Contact in Pharmaceutical Markets," Working Papers 303, Barcelona Graduate School of Economics.
- Javier Coronado & Sergi Jiménez-Martín & Pedro L. Marín, 2007. "Multimarket contact in pharmaceutical markets," Economics Working Papers 1033, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2007.
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
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