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Vaccine Supply: Effects of Regulation and Competition

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  • Patricia Danzon
  • Nuno Sousa Pereira

Abstract

In US vaccine markets, competing producers with high fixed, sunk costs face relatively concentrated demand. The resulting price and quality competition leads to the exit of all but one or very few producers per vaccine. Our empirical analysis of exits from US vaccine markets supports the hypothesis that high fixed costs and both price and quality competition contribute to vaccine exits. We find no evidence that government purchasing has significant effects, possibly because government purchase tends to increase volume but lower price, with offsetting effects. Evidence from the flu vaccine market confirms that government purchasing is not a necessary condition for exits and the existence of few suppliers per vaccine in the US.

Suggested Citation

  • Patricia Danzon & Nuno Sousa Pereira, 2011. "Vaccine Supply: Effects of Regulation and Competition," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(2), pages 239-271.
    • Handle: RePEc:taf:ijecbs:v:18:y:2011:i:2:p:239-271
    DOI: 10.1080/13571516.2011.584429
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    Cited by:

    1. Lin, Qi & Zhao, Qiuhong & Lev, Benjamin, 2022. "Influenza vaccine supply chain coordination under uncertain supply and demand," European Journal of Operational Research, Elsevier, vol. 297(3), pages 930-948.
    2. Batabyal, Amitrajeet & Beladi, Hamid, 2022. "City and Regional Demand for Vaccines Whose Supply Arises from Competition in a Bertrand Duopoly," MPRA Paper 113758, University Library of Munich, Germany, revised 28 Jun 2022.
    3. Postigo, Antonio, 2023. "The Economics and Actors in Vaccine Research and Development," EconStor Open Access Book Chapters, in: From Lab to Jab: Improving Asia and the Pacific’s Readiness to Produce and Deliver Vaccines, pages 17-42, ZBW - Leibniz Information Centre for Economics.
    4. Weiwei Chen & Mark Messonnier & Fangjun Zhou, 2018. "Factors associated with the pricing of childhood vaccines in the U.S. public sector," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 252-265, February.
    5. Amir, Rabah & Liu, Zhiwei & Tian, Jingwen, 2023. "Negative network effects and public policy in vaccine markets," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 136-149.
    6. Faisal Khurshid & Woo‐Yong Park & Felix T. S. Chan, 2020. "The impact of competition on vertical integration: The role of technological niche width," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 789-800, March.
    7. Pedro Garcia-del-Barrio, 2017. "Pareto-improving income redistribution: expanding consumer access to the vaccines market," Economics of Governance, Springer, vol. 18(3), pages 275-313, August.

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    More about this item

    Keywords

    Vaccines; Government; Procurement; Firm Exit; Pharmaceuticals;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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