Substitutability Between Drugs, Innovation, and Fiscal Policy in the Pharmaceutical Industry

Felipa De Mello-Sampayo, Sofia de Sousa-Vale and Francisco Camoes
Additional contact information
Sofia de Sousa-Vale: Department of Economics, ISCTE-IUL, Av. Forcas Armadas
Francisco Camoes: Department of Economics, ISCTE-IUL, Av. Forcas Armadas

Annals of Economics and Finance, 2015, vol. 16, issue 2, 273-289

Abstract: A theoretical model is developed in order to examine and explain the growth and welfare effects of fiscal policies in the pharmaceutical industry. When the fiscal instrument is a tax over pharmaceutical firms’ profits, R&D by firms in the pharmaceutical sector results in growth if there is a generic market. Otherwise, a subsidy over pharmaceutical firms’ profits should be considered to generate innovation in medicines. In terms of policy implications, our empirical results suggest that stimulating generic competition in the pharmaceutical sector is a main instrument to contain costs and promote welfare.

Keywords: Pharmaceutical Industry; Generic Market; Monopolistic Competi- tion; Fiscal Policy. (search for similar items in EconPapers)
JEL-codes: C63 H25 L65 O31 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://down.aefweb.net/AefArticles/aef160202deMelloSampayo.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cuf:journl:y:2015:v:16:i:2:demellosampayo

Access Statistics for this article

Annals of Economics and Finance is currently edited by Heng-fu Zou

More articles in Annals of Economics and Finance from Society for AEF Contact information at EDIRC.
Bibliographic data for series maintained by Qiang Gao ().