Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88567
Authors: 
Birg, Laura
Year of Publication: 
2013
Series/Report no.: 
Discussion Papers, Center for European Governance and Economic Development Research 178
Abstract: 
This paper studies externalities of nationally determined cost-sharing systems, in particular coinsurance rates (patients pay a percentage of the price), under pharmaceutical parallel trade in a two-country model with a vertical distributor relationship. Parallel trade generates a price-decreasing competition effect in the destination country and a price-increasing double marginalization effect in the source country. An increase of the coinsurance rates in the destination country of the parallel import mitigates the double marginalization effect in the source country. An increase of the coinsurance rate in the source country reinforces the competition effect in the destination country. This may be a case for policy coordination in the European Union.
Subjects: 
externalities
spillovers
parallel trade
cost-sharing
coinsurance rates
JEL: 
F12
I11
I18
Document Type: 
Working Paper

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