The economics of the public option: Evidence from local pharmaceutical markets

Arbeitspapier

We study the effects of competition by state-owned firms, leveraging the decentralized entry of public pharmacies to local markets in Chile. Public pharmacies sell the same drugs at a third of private pharmacy prices, because of stronger upstream bargaining and market power in the private sector, but are of lower quality. Public pharmacies induced market segmentation and price increases in the private sector, which benefited the switchers to the public option but harmed the stayers. The countrywide entry of public pharmacies would reduce yearly consumer drug expenditure by 1.6 percent.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 951

Classification and Topics

• Classification: Wirtschaft ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Atal, Juan Pablo ; Cuesta, Jose Ignacio ; González, Felipe ; Otero, Cristobal
• Event: Veröffentlichung
• (who): Queen Mary University of London, School of Economics and Finance
• (where): London
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/284301
• Last update: 10.03.2025, 11:44 AM CET