Quality Regulation and Competition: Evidence from Pharmaceutical Markets

The Economics of the Public Option: Evidence from Local Pharmaceutical Markets

“…Because these weights are constant, changes in the index are driven by changes in prices and not by changes in market shares or market structure. This price index has been used in previous work studying retail drug pricing (e.g., Atal et al, 2022). For sales, we use the residuals from the projection of the outcome variable on month-of-the-year fixed effects by molecule-market to account for seasonality that is specific to sales in some markets (e.g., due to tourism in the summer).…”

“…Moura and Barros (2020) study the price effects of competition in the market for over-the-counter drugs, while Bennett and Yin (2019) study the price and quality effects of the entry of pharmacy chains in a market dominated by low-quality firms. Other research focuses on the effects of policies to lower drug prices, including price regulation (Dubois and Lasio, 2018;Dubois et al, 2022;Mohapatra and Chatterjee, 2020;Maini and Pammolli, 2022); quality regulation (Atal et al, 2022); and public procurement (Brugués, 2020;Dubois et al, 2021). We provide novel evidence of how public competition in the retail market affects equilibrium market outcomes.…”