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Health Systems, Inequality and Incentives to Innovate

  • Rajat Archaryya
  • María del Carmen García-Alonso

    ()

Governments often subsidize poorer groups in society to ensure their access to new drugs. We analyze here the optimal income-based price subsidies in a strategic environment. We show that asymmetric health systems can arise even though countries are ex-ante symmetric when international price discrimination is possible. Universal access is less likely to arise without price discrimination but also health policy coordination becomes more important. This is due to the multiple equilibria which make the attainment of universal coverage within a given income range ambiguous. We also show that an increase in intra-country inequality does not always lead to less likely universal coverage when international price discrimination is possible.

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File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/0902.pdf
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Paper provided by School of Economics, University of Kent in its series Studies in Economics with number 0902.

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Date of creation: Feb 2009
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Handle: RePEc:ukc:ukcedp:0902
Contact details of provider: Postal: School of Economics, University of Kent, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 827497
Web page: http://www.kent.ac.uk/economics/

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