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Universal access, parallel trade and incentives to innovate

Acharyya, Rajat, Garcia-Alonso, Maria D C (2014) Universal access, parallel trade and incentives to innovate. Bulletin of Economic Research, 66 (S1). S74-S91. ISSN 0307-3378. (doi:10.1111/boer.12013)

Abstract

Governments often subsidize poorer groups in society to ensure their access to new drugs. We analyze the optimal income-based price subsidies in a strategic environment. We show that universal access is less likely to arise when price arbitrage prevents international price discrimination. When this is not the case, under some income ranges, bilateral universal coverage can be supported by equilibrium subsidies together with bilateral partial provision. In such a case, international health policy coordination becomes relevant. We also show that asymmetric universal access to medicines across countries can arise, even when countries are ex-ante symmetric, when international price discrimination is possible and governments cannot design subsidies proportional to either income or quality.

Item Type: Article
DOI/Identification number: 10.1111/boer.12013
Uncontrolled keywords: Health systems; Pharmaceuticals; Innovation; Income Based Subsidies; Price Discrimination
Subjects: H Social Sciences
H Social Sciences > HB Economic Theory
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Maria Garcia-Alonso
Date Deposited: 29 Jan 2015 17:08 UTC
Last Modified: 06 Feb 2020 11:44 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/46972 (The current URI for this page, for reference purposes)
Garcia-Alonso, Maria D C: https://orcid.org/0000-0002-4457-3332
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