nep-lam New Economics Papers
on Central and South America
Issue of 2019‒09‒30
four papers chosen by

  1. Quality Regulation and Competition: Evidence from Pharmaceutical Markets By Jesus Juan Pablo Atal; Jose´ Ignacio Cuesta; Morten Sæthre
  2. A Bad Year? Climate Variability and the Wine Industry in Chile By Eduardo A. Haddad; Patricio Aroca, Pilar Jano, Ademir Rocha, Bruno Pimenta
  3. Subnational government finances and capabilities for regional economic development in Uruguay: 1990-2016 By Leonel Muinelo-Gallo; Adrián Rodríguez Miranda
  4. Knowledge searching strategies, testing for complementarities on the innovation behavior of the firm By Alejandro Bello-Pintado; Felipe Berrutti; Carlos Bianchi; Pablo Blanchard

  1. By: Jesus Juan Pablo Atal (University of Pennsylvania); Jose´ Ignacio Cuesta (University of Chicago); Morten Sæthre (Norwegian School of Economics)
    Abstract: Quality regulation attempts to ensure quality and to foster price competition by reducing vertical di?erentiation, but may also have unintended consequences through its e?ects on market structure. We study these e?ects in the context of pharmaceutical bioequivalence, which is the primary quality standard for generic drugs. Exploiting the staggered phase-in of bioequivalence requirements in Chile, we show that stronger quality regulation decreased the number of drugs in the market by 25%, increased average paid prices by 10%, decreased total sales by 20%, and did not have a significant e?ect on observed outcomes related to drug quality. These adverse e?ects were concentrated among small markets. Our results suggest that the intended e?ects of quality regulation on price competition through increased (perceived) quality of generics were overturned by adverse competitive e?ects arising from the costs of complying with the regulation.
    Keywords: Aggregate quality regulation, competition, bioequivalence, generic pharmaceuticals
    JEL: I11 L11 L15
    Date: 2019–07–15
  2. By: Eduardo A. Haddad; Patricio Aroca, Pilar Jano, Ademir Rocha, Bruno Pimenta
    Abstract: Short-term climate conditions may affect crop yields and vintage quality and, as a consequence, wine prices and vineyards’ earnings. In this paper, we use a CGE model for Chile, which incorporates detailed information about the value chain of the wine sector in the country. Using information for the 2015-2016 harvest, we calibrate climate shocks associated with a bad year for the wine industry in Chile, when premature rains occurred in important wine regions, reducing the area harvested and leading to wines with less concentrated flavors, particularly for reds. We model the climate shocks as a technical change in the grape-producing sector (quantity effect). Moreover, we model quality effects as a shift in the foreign demand curve for Chilean wine. Given the specific economic environment in the model and the proposed simulation, it is possible to note the reduction of Chilean real GDP by about 0.067%. By decomposing this result, we verify that the quality effect has a slightly greater weight compared to the quantity effect.
    Keywords: Climate, viticulture, wine, computable general equilibrium, Chile
    JEL: C68 Q13 Q54
    Date: 2019–09–20
  3. By: Leonel Muinelo-Gallo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a); Adrián Rodríguez Miranda (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a)
    Abstract: The purpose of this work is to reflect on the relationship between subnational finance and the capabilities for regional economic development in Uruguay. It presents rigorous evidence of recent work on the relationships between fiscal decentralization, intergovernmental transfers and regional disparities in Uruguay. This is analyzed together with new available information on the evolution of subnational finances and a critical analysis of the productive policies developed in the country. It seeks to contribute to the current debate on the relationships between territorial development, decentralization and the role of public policy to reduce regional disparities. In this regard, it is concluded that these challenges require a better financing scheme for local development, with greater management capacity for decision-making at the local level. For this, as a prerequisite, it is urgent to improve the technical and management capacities of subnational governments.
    Keywords: descentralization, regional development, local development, bubnational finance, subnational governments, productive policies, Uruguay
    JEL: H70 H77 R11 R51 R58
    Date: 2019–07
  4. By: Alejandro Bello-Pintado (Universidad Pública de Navarra (España)); Felipe Berrutti (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a); Carlos Bianchi (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a); Pablo Blanchard (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economí­a)
    Abstract: According to two basic building blocks of neo-Schumpeterian economics, firms innovation process shows idiosyncratic features related to their specific characteristics of the firm and of the environment where it acts. Moreover, firms innovation is recognized as an interactive process. Hence, due to systemic functioning, it is expected that the effect of two simultaneous external linkages will be different from the sum of their isolated effects. However, the external search for knowledge and information sources (KISs) may present constraints related to the searching costs and the cognitive distance between the firm and the KISs. This paper aims to contribute empirical evidence to revisit these theoretical building blocks by analyzing the search strategies conducted by firms. We identify three types of external KISs and analyze the effects of eight search strategies (KIS combinations) on firms innovation behavior. In addition, we test the complementarity or substitution effects of the simultaneous use of different KISs on the innovation behavior – effort and performance – of Uruguayan firms. We identify the specific effect of different KIS combinations but find no evidence of a linear relation between search scope and innovation behavior. Moreover, we find evidence of complementary effects between relatively closer and more distant KISs and substitution effects between relatively near KISs.
    Keywords: information sources, search strategy, complementarity, supermodularity
    JEL: D22 D83 L25 O32
    Date: 2019

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