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on Regulation |
| By: | Kurt R. Brekke (Department of Economics, Norwegian School of Economics); Chiara Canta (Department of Economics, Norwegian School of Economics); Odd Rune StraumeAuthor-Email: o.r.straume@eeg.uminho.p (Universidade do Minho - NIPE) |
| Abstract: | In this paper we study the impact of reference pricing (RP) on entry of generic firms in the pharmaceutical market. For given prices, RP increases generic firms' expected profit, but since RP also stimulates price competition, the impact on generic entry is theoretically ambiguous. In order to empirically test the effects of RP, we exploit a policy reform in Norway in 2005 that exposed a subset of drugs to RP. Having detailed product-level data for a wide set of substances from 2003 to 2013, we find that RP increased the number of generic drugs. We also find that RP increased market shares of generic drugs, reduced the prices of both branded and generic drugs, and led to a (weakly significant) decrease in total drug expenditures. The reduction in total expenditures was relatively smaller than the reduction in average prices, reflecting the fact that lower prices stimulated total demand. |
| Keywords: | Pharmaceuticals; Reference pricing; Generic entry |
| JEL: | I11 I18 L13 L65 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:6/2015&r=reg |
| By: | Edmond Baranes; Stefan Behringer; Jean-Christophe Poudou |
| Abstract: | This paper considers collusion between asymmetric networks in the telecommunications industry. Its primary purpose is to fill the gap between the literature on collusion between asymmetric firms and the literature on collusion in the telecommunications industry. Employing the standard Hotelling framework of horizontal product differentiation with non-linear tariffs and network based price discrimination we allow for differentiation in a second dimension. Modulo locations, the subscribers to each network operator face an asymmetry parameter that directly impacts their demands and can capture asymmetries in demand elasticities, in demand size, or even both. The implications of these asymmetries for the possibility of sustaining collusion are investigated under alternative access pricing regimes. |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:15-13&r=reg |
| By: | Christos Genakos; Pantelis Koutroumpis; Mario Pagliero |
| Abstract: | Regulations that impose maximum mark-ups are intended to protect consumers from firms exercising market power. But a study by Christos Genakos and colleagues suggests that they can have the opposite effect: when Greece lifted controls on the market for fresh fruit and vegetables in June 2011, consumers enjoyed lower prices. |
| Keywords: | markup regulation, focal point, collusion, ex-post policy evaluation |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepcnp:456&r=reg |
| By: | M. Rouhani, Omid |
| Abstract: | The major risk associated with the provision of toll facilities results from uncertain future demand/revenue generated from the facilities. In this paper, I examine various options for mitigating toll revenue risk and provide a set of recommendations as to how revenue risk mitigation should be pursued. In addition to conducting more careful traffic revenue studies and risk analyses, policy makers can provide more flexible tolling schedules, adopt advanced toll collection technology, and limit the non-compete clause included in many toll road deals with private operators. |
| Keywords: | Risk mitigation; revenue risk; pricing method; toll collection technology; non-compete clause. |
| JEL: | D61 R42 |
| Date: | 2015–11–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:67662&r=reg |
| By: | André De Palma (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS, ENS Cachan - École normale supérieure - Cachan); Robin Lindsey (Sauder - Sauder School of Business [British Columbia] - University of British Columbia); Guillaume Monchambert (ENS Cachan - École normale supérieure - Cachan) |
| Abstract: | There is a large operations research literature on public transit system design. An extensive economic literature has also developed on public transit capacity investments, service frequency, and optimal pricing and subsidy policy. These two branches of literature have made significant advances in understanding public transit systems. However, in contrast to the literature on automobile traffic congestion, most of the studies have employed static models that cannot account for travelers' time-of-use decisions and the dynamics of transit congestion and crowding. The time profile of ridership is driven by the trade-off that users face between traveling at peak times and suffering crowding, and avoiding the peak by traveling earlier or later than they would like. A few studies have explored this trade-off using simple microeconomic models that combine trip-scheduling preferences as introduced by Vickrey (1969) with a crowding cost function that describes how utility from travel decreases with passenger loads. In this paper we use this modeling framework to analyze usage of a rail transit line, and assess the potential benefits from internalizing crowding externalities by setting differential train fares. We also present results on optimal train capacity and the number of trains put into service. |
| Keywords: | public transport, crowding, pricing, optimal capacity |
| Date: | 2015–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01223169&r=reg |
| By: | Richard Le Goff (ENSTA ParisTech UEA - Unité d'Économie Appliquée - Univ. Paris-Saclay, ENSTA ParisTech - École Nationale Supérieure de Techniques Avancées); José Alejandro Rojas (ENSTA ParisTech UEA - Unité d'Économie Appliquée - Univ. Paris-Saclay, ENSTA ParisTech - École Nationale Supérieure de Techniques Avancées) |
| Abstract: | Voice services were the main source of revenue for French fixed and mobile telecommunications operators in the early 2000s. This situation has progressively changed. Nowadays broadband services are the main source of revenues for fixed line operators and the same phenomenon is taking place in the mobile sector. As operators launch new services, they maintain the existing ones in their commercial plans, while allowing consumers an unlimited usage of the feature for no extra charge. We refer to this trend as commoditization. In order to explain the rationale behind this phenomenon, we will study the causes and effects of fixed and mobile voice services commoditization on the various operators by examining the links between market structure, regulatory decisions and operators' corporate strategies. Our goal is to determine to what level commoditization process is the result of operators' corporate strategies, and to assess the role played by regulatory decisions in the process. |
| Keywords: | Commoditization,telecommunication industries,strategic choice,public policy,regulation |
| Date: | 2014–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01223466&r=reg |
| By: | Iossa, Elisabetta; Martimort, David |
| Abstract: | We analyze risk allocation and contractual choices when public procurement is plagued with moral hazard, private information on exogenous shocks, and threat of corruption. Complete contracts entail state-contingent clauses that compensate the contractor for shocks unrelated to his own effort. By improving insurance, those contracts reduce the agency cost of moral hazard. When the contractor has private information on revenues shocks, verifying messages on shocks realizations is costly. Incomplete contracts do not specify state-contingent clauses, thereby saving on verifiability costs. This makes incomplete contracts attractive even though they entail greater agency costs. Because of private information on contracting costs, a public official may have discretion to choose whether to procure under a complete or an incomplete contract. When the public official is corrupt, such delegation results in incomplete contracts being chosen too often. Empirical predictions on the use of incomplete contracts and policy implications on the benefits of standardized contracts are discussed. |
| Keywords: | corruption; incomplete contracts; moral hazard; principal-agent-supervisor model; public-private partnerships; risk allocation |
| JEL: | D23 D82 K42 L33 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10925&r=reg |