Multimarket Contact in Pharmaceutical Markets

Javier Coronado and Sergi Jiménez-Martín
Authors registered in the RePEc Author Service: Sergi Jimenez-Martin

No 303, Working Papers from Barcelona School of Economics

Abstract: The purpose of this paper is to analyze the effect of multimarket contact on the behavior of pharmaceutical firms controlling for different levels of regulatory constraints using IMS MIDAS database. Theoretically, firms that meet in several markets are expected to be capable of sustaining implicitly more profitable out- comes, even if perfect monitoring is not possible. Firms may find it profitable to redistribute their market power among markets where they are operating. We present evidence for nine OECD countries with different degrees of regulation and show that regulation affects the importance of economic forces on firms' price setting behavior. Furthermore, our results confirms the presence of the predictions of the multimarket theory for more market friendly countries (U.S. and Canada) and less regulated ones (U.K., Germany, Netherlands), in contrast, for highly regulated countries (Japan, France, Italy and Spain) the results are less clear with some countries being consistent with the theory while others contradicting it.

Keywords: Pharmaceutical prices; multimarket contact; Regulation (search for similar items in EconPapers)
JEL-codes: I18 L11 L13 L65 (search for similar items in EconPapers)
Date: 2015-09
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Related works:
Working Paper: Multimarket Contact in Pharmaceutical Markets (2008)
Working Paper: Multimarket Contact in Pharmaceutical Markets (2007)
Working Paper: Multimarket contact in pharmaceutical markets (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:303

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