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Assessing excess profits from different entry regulations

Author

Listed:
  • Joan-Ramon Borrell

    (PPRE-IREA, Universitat de Barcelona)

  • Laura Fernández-Villadangos

    (PPRE-IREA, Universitat de Barcelona)

Abstract

Entry regulations affecting professional services such as pharmacies are common practice in many European countries. We assess the impact of entry regulations on profits estimating a structural model of entry using the information provided by a policy experiment. We use the case of different regional policies governing the opening of new pharmacies in Spain to show that structural models of entry ought to be estimated with data from policy experiments to pin down how entry regulations change payoffs functions of the incumbents. Contrary to the public interest rationales, regulations are not boosting only small town pharmacies payoffs nor increasing all pharmacies payoffs alike. The gains from regulations are very unevenly distributed,suggesting that private interests are shaping the current mix of entry and markup regulations.

Suggested Citation

  • Joan-Ramon Borrell & Laura Fernández-Villadangos, 2009. "Assessing excess profits from different entry regulations," Working Papers XREAP2009-03, Xarxa de Referència en Economia Aplicada (XREAP), revised Apr 2009.
    • Handle: RePEc:xrp:wpaper:xreap2009-03
    as

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    File URL: http://www.xreap.cat/RePEc/xrp/pdf/XREAP2009-3.pdf
    File Function: Revised version, 2009
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    References listed on IDEAS

    as
    1. Eckard, E Woodrow, Jr, 1985. "The Effects of State Automobile Dealer Entry Regulation on New Car Prices," Economic Inquiry, Western Economic Association International, vol. 23(2), pages 223-242, April.
    2. Griffith, Rachel & Harmgart, Heike, 2008. "Supermarkets and Planning Regulation," CEPR Discussion Papers 6713, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Un ejemplo clásico de restricciones a la entrada: el caso de las farmacias
      by Gerard Llobet in Nada Es Gratis on 2013-05-07 11:00:29

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    More about this item

    Keywords

    Entry; regulation; professional services;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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