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Please use this identifier to cite or link to this item: https://dspace.lboro.ac.uk/2134/25667

Title: Pharmaceutical innovation and parallel trade
Authors: Bennato, Anna R.
Valletti, Tommaso
Keywords: IPRs
Parallel trade
Pharmaceutical R&D
Price regulation
Issue Date: 2014
Publisher: © Elsevier
Citation: BENNATO, A.R. and VALLETTI, T., 2014. Pharmaceutical innovation and parallel trade. International Journal of Industrial Organization, 33, pp. 83-92.
Abstract: This paper proposes a North–South model to study the interaction between price regulation policies and parallel trade, with a particular focus on the pharmaceutical sector. We show that, under parallel trade, R&D investment can rise only when the South government takes into full account its impact both on investment and on the firm's decision to supply the regulated country. This arises because of a complete withdrawal from price regulation. When policy choices are endogenized, indeed the South wants to achieve this level of full commitment when it is large in size. When instead it is smaller in size, the South chooses an intermediate form of commitment whereby it anticipates its effect only on local distribution and delivery, but not on global R&D investment. As a response to these credible levels of price control commitments, the North reacts by allowing parallel imports from the South.
Description: This paper was accepted for publication in the journal International Journal of Industrial Organization and the definitive published version is available at https://doi.org/10.1016/j.ijindorg.2014.02.009
Version: Accepted version
DOI: 10.1016/j.ijindorg.2014.02.009
URI: https://dspace.lboro.ac.uk/2134/25667
Publisher Link: https://doi.org/10.1016/j.ijindorg.2014.02.009
ISSN: 0167-7187
Appears in Collections:Published Articles (Economics)

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