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Publication year
Identifying Industry Margins with Price Constraints: Structural Estimation on Pharmaceuticals
Resource type
Authors/contributors
- Dubois, Pierre (Author)
- Lasio, Laura (Author)
Title
Identifying Industry Margins with Price Constraints: Structural Estimation on Pharmaceuticals
Abstract
We develop a structural model to investigate the effects of pharmaceutical price regulation on demand and on manufacturers' price-setting behavior in France. We estimate price-cost margins in a regulated market with price constraints and infer whether these constraints are binding, exploiting cost restrictions across drugs, which come from observing the same drugs in potentially price-constrained markets (France) and in markets where prices are unregulated (US and Germany). Our counterfactual simulations suggest that price constraints generated modest savings for anti-ulcer drugs in 2003–2013 (2 percent of total expenses), relative to a free pricing scenario, and shifted consumption from generic to branded drugs.
Publication
American Economic Review
Volume
108
Issue
12
Pages
3685-3724
Date
2018-12
Citation
Dubois, P., & Lasio, L. (2018). Identifying Industry Margins with Price Constraints: Structural Estimation on Pharmaceuticals. American Economic Review, 108, 3685–3724.
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