nep-lam New Economics Papers
on Central and South America
Issue of 2023‒01‒30
three papers chosen by

  1. Inequality and Risk Preference By Harry Pickard; Thomas Dohmen; Bert van Landeghem
  2. The Economics of the Public Option: Evidence from Local Pharmaceutical Markets By Juan Pablo Atal; José Ignacio Cuesta; Felipe González; Cristóbal Otero
  3. Effects of the Entry of Food Delivery Apps in the Restaurant Industry: Evidence from Brazil By Azzoni, Carlos R.; Moita, Rodrigo M. S.; Rodrigues, Mateus; Merlo, Marina; Fisch, Arthur

  1. By: Harry Pickard (Newcastle University Business School, Newcastle University, United Kingdom); Thomas Dohmen (Economics Department, University of Bonn, Germany); Bert van Landeghem (Department of Economics, University of Sheffield, United Kingdom)
    Abstract: This paper studies the relationship between income inequality and risk taking. Increased income inequality is likely to enlarge the scope for upward comparisons and, in the presence of reference-dependent preferences, to increase willingness to take risks. Using a globally representative dataset on risk preference in 76 countries, we empirically document that the distribution of income in a country has a positive and significant link with the preference for risk. This relationship is remarkably precise and holds across countries and individuals, as well as alternate measures of inequality. We find evidence that individuals who are more able to understand inequality and individuals who fall behind their inherent point of reference increase their preference for risk. Two complementary instrumental variable approaches support a causal interpretation of our results.
    Keywords: Income inequality; risk preference; risk sensitivity
    JEL: D91 O15 D81 D01
    Date: 2023–01
  2. By: Juan Pablo Atal; José Ignacio Cuesta; Felipe González; Cristóbal Otero
    Abstract: We study the effects of competition by state-owned firms, leveraging the decentralized entry of public pharmacies to local markets in Chile. Public pharmacies sell the same drugs at a third of private pharmacy prices, because of stronger upstream bargaining and market power in the private sector, but are of lower quality. Public pharmacies induced market segmentation and price increases in the private sector, which benefited the switchers to the public option but harmed the stayers. The countrywide entry of public pharmacies would reduce yearly consumer drug expenditure by 1.5 percent.
    JEL: D72 H4 I18 L3
    Date: 2022–12
  3. By: Azzoni, Carlos R. (Departamento de Economia, Universidade de São Paulo); Moita, Rodrigo M. S. (Departamento de Economia, Universidade de São Paulo); Rodrigues, Mateus (Graduate Student, Sao Paulo School of Economics, Fundação Getúlio Vargas); Merlo, Marina (iFood Public Policy); Fisch, Arthur (Public Sector Politics and Economics Research Center, Fundação Getúlio Vargas)
    Abstract: Food delivery apps have become popular in recent years, with additional strength during the COVID-19 pandemic. Do these apps benefit new and more suit to delivery restaurants at the cost of harming more traditional non-delivery ones? What is the net impact on the restaurant industry as a whole? This paper investigates these questions by analyzing the impact of the major meal delivery app in the Brazilian restaurant industry. We analyze the effects of the app’s introduction on the opening and closure of restaurants and employment in the restaurant business. The app positively affected opening new restaurants, but less so during the pandemic years. It also had a negative effect on the rate of closure of restaurants, implying a net positive impact on the industry as a whole. But, again, this effect is smaller during the COVID19 pandemic. Also, restaurants increased their employment when they joined the delivery platform. At the same time, restaurants that remained out of the platform decreased their employment during the same period. The net effect of the delivery app on employment in the restaurant industry is positive but not enough to offset the general negative trend of decreasing employment.
    Keywords: food delivery apps; restaurant industry
    JEL: R10
    Date: 2023–01–13

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