EconPapers    
Economics at your fingertips  
 

Gradual Incorporation of Information: Pharmaceutical Stocks and the Evolution of President Clinton's Health Care Reform

Sara Fisher Ellison and Wallace P Mullin

Journal of Law and Economics, 2001, vol. 44, issue 1, 89-129

Abstract: We examine the effect of the evolution of President Clinton's health care reform proposal over January 1992-October 1993 on pharmaceutical stock prices. We identify a 52.3 percent decline in market-adjusted prices, which we then associate with health care reform. Applying a new technique, isotonic regression, we find most of the decline occurred gradually. Much of the decline occurred as the Clinton plan adopted strategies to contain health care costs, including "managed competition" and implicit regulation. Indirect evidence suggests that the wealth lost by pharmaceutical companies may have been largely an anticipated transfer. Our results are relevant to understanding the likely effects of the Clinton plan and more recent proposals. Many other policy changes are marked by gradual public revelation of information, which may not be completely observable by a researcher. Our approach may uncover information about the anticipated effects of policies unavailable from a traditional event study. Copyright 2001 by the University of Chicago.

Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (15) Track citations by RSS feed

Downloads: (external link)
http://dx.doi.org/10.1086/320269 (application/pdf)
Access to the online full text or PDF requires a subscription.

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:ucp:jlawec:v:44:y:2001:i:1:p:89-129

Access Statistics for this article

More articles in Journal of Law and Economics from University of Chicago Press
Series data maintained by Journals Division ().

 
Page updated 2017-09-29
Handle: RePEc:ucp:jlawec:v:44:y:2001:i:1:p:89-129