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The Effect of Pharmacies' Right to Negotiate Discounts on the Market Share of Parallel Imported Pharmaceuticals
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.ORCID iD: 0000-0003-4467-8676
2015 (English)In: The B.E. Journals in Economic Analysis & Policy, ISSN 1935-1682, E-ISSN 1935-1682, Vol. 15, no 3, 1197-1235 p.Article in journal (Refereed) Published
Abstract [en]

This paper analyzes how allowing pharmacies to negotiate discounts with parallel traders and producers affects the market share for parallel imports. Economic theory predicts that discount negotiations will promote products bought directly from the producers because producers have cost advantages, due to which they always underbid the marginal prices of parallel traders. A reform that allowed discount negotiations is found to reduce the market share for parallel imports by about 11 percentage points to reach 31%. The results clearly indicate that pharmacies have an important role in the choice between medically equivalent pharmaceuticals.

Place, publisher, year, edition, pages
2015. Vol. 15, no 3, 1197-1235 p.
Keyword [en]
drugs, incentives, margins, parallel imports, parallel trade, pharmacies
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URN: urn:nbn:se:umu:diva-106322DOI: 10.1515/bejeap-2014-0079ISI: 000356001900008OAI: diva2:842236
Swedish Competition Authority
Available from: 2015-07-17 Created: 2015-07-10 Last updated: 2016-06-13Bibliographically approved

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