Economic analysis in health care regulation : three essays

ABSTRACT - It is the purpose of the present thesis to emphasize, through a series of examples, the need and value of appropriate pre-analysis of the impact of health care regulation. Specifically, the thesis presents three papers on the theme of regulation in different aspects of health care provision and financing. The first two consist of economic analyses of the impact of health care regulation and the third comprises the creation of an instrument for supporting economic analysis of health care regulation, namely in the field of evaluation of health care programs. The first paper develops a model of health plan competition and pricing in order to understand the dynamics of health plan entry and exit in the presence of switching costs and alternative health premium payment systems. We build an explicit model of death spirals, in which profitmaximizing competing health plans find it optimal to adopt a pattern of increasing relative prices culminating in health plan exit. We find the steady-state numerical solution for the price sequence and the plan’s optimal length of life through simulation and do some comparative statics. This allows us to show that using risk adjusted premiums and imposing price floors are effective at reducing death spirals and switching costs, while having employees pay a fixed share of the premium enhances death spirals and increases switching costs. Price regulation of pharmaceuticals is one of the cost control measures adopted by the Portuguese government, as in many European countries. When such regulation decreases the products’ real price over time, it may create an incentive for product turnover. Using panel data for the period of 1997 through 2003 on drug packages sold in Portuguese pharmacies, the second paper addresses the question of whether price control policies create an incentive for product withdrawal. Our work builds the product survival literature by accounting for unobservable product characteristics and heterogeneity among consumers when constructing quality, price control and competition indexes. These indexes are then used as covariates in a Cox proportional hazard model. We find that, indeed, price control measures increase the probability of exit, and that such effect is not verified in OTC market where no such price regulation measures exist. We also find quality to have a significant positive impact on product survival. In the third paper, we develop a microsimulation discrete events model (MSDEM) for costeffectiveness analysis of Human Immunodeficiency Virus treatment, simulating individual paths from antiretroviral therapy (ART) initiation to death. Four driving forces determine the course of events: CD4+ cell count, viral load resistance and adherence. A novel feature of the model with respect to the previous MSDEMs is that distributions of time to event depend on individuals’ characteristics and past history. Time to event was modeled using parametric survival analysis. Events modeled include: viral suppression, regimen switch due virological failure, regimen switch due to other reasons, resistance development, hospitalization, AIDS events, and death. Disease progression is structured according to therapy lines and the model is parameterized with cohort Portuguese observational data. An application of the model is presented comparing the cost-effectiveness ART initiation with two nucleoside analogue reverse transcriptase inhibitors (NRTI) plus one non-nucleoside reverse transcriptase inhibitor(NNRTI) to two NRTI plus boosted protease inhibitor (PI/r) in HIV- 1 infected individuals. We find 2NRTI+NNRTI to be a dominant strategy. Results predicted by the model reproduce those of the data used for parameterization and are in line with those published in the literature.

A green future for European electricity? :Energy sources, policies and further determinants of the household price of electricity

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics

Welfare analysis of regulating mobile termination rates in the UK with an application to the Orange/T-Mobile merger

We present a calibrated model of the UK mobile telephony market with four mobile networks; calls to and from the fixed network; network-based price discrimination; and call externalities. Our results show that reducing mobile termination rates broadly in line with the recent European Commission Recommendation to either pure long-run incremental cost ; reciprocal termination charges with fixed networks; or Bill & Keep (i.e. zero termination rates), increases social welfare, consumer surplus and networks profits. Depending on the strength of call externalities, social welfare may increase by as much as £ 990 million to £ 4.5 billion per year, with Bill & Keep leading to the highest increase in welfare. We also apply the model to estimate the welfare effects of the 2010 merger between Orange and T-Mobile under different scenarios concerning MTRs, and predict that consumer surplus decreases strongly.

Oil price shocks and the Portuguese economy since the 1970s

This paper assesses empirically the effect of oil price shocks on Portuguese aggregate economic activity, industrial production and price level. We take the usual multivariate VAR methodology to investigate the magnitude and stability of this relationship. In doing so, we follow the approach presented in the recent literature and adopt different oil price specifications. We conclude that, as for most industrialized countries, the nature of this relationship changed in the mid-1980s. Furthermore, we show that the main Portuguese macroeconomic variables have become progressively less responsive to oil shocks and the adjustment towards equilibrium has become increasingly faster.

Carbon prices. Dynamic analysis of European and Californian markets

Dissertação para obtenção do Grau de Doutor em Alterações Climáticas e Políticas de Desenvolvimento Sustentável

The Portuguese contemporary art as an investment

In this paper we investigate what drives the prices of Portuguese contemporary art at auction and explore the potential of art as an asset. Based on a hedonic prices model we construct an Art Price Index as a proxy for the Portuguese contemporary art market over the period of 1994 to 2014. A performance analysis suggests that art underperforms the S&P500 but overperforms the Portuguese stock market and American Government bonds. However, It does it at the cost of higher risk. Results also show that art as low correlation with financial markets, evidencing some potential in risk mitigation when added to traditional equity portfolios.

“Private label products: A category analysis”

The presented dissertation was developed within a partnership between Nova School of Business and Economics and the Portuguese retailer Sonae MC. The main objective of the study was to develop an analysis for the confectionary category to identify potential development opportunities for new Private Label products. In order to do so, the starting point was to understand how the confectionery market was behaving, followed by and understanding of Continente’s performance in that market. Aiming to point out development opportunities, the analysis was split between the subcategories – Chocolate, Chewing Gums and Sweets. The Subcategory performance was assessed in terms of sales, number of SKU’s, Private Label weight and it market position in terms of share. For the potential development opportunities a comparison between the top selling Branded Product and the competitors’ position was developed, in order to establish a reasonable size and retail price for such products. Key Word: Private Label, Branded Products, Continente, Sonae MC, Retail, SKU’s, Sales, Price, Market Share,

Comparateive analysis: Public and private school management systems

The Portuguese educational system has counted, for many years, with the co-existence of both public and private schools. In fact, the country’s growth and development led, in the past, to an increasing demand for free of charge public education that could only be matched through the creation of “publicly-subsidized and privately owned and managed schools”. Still, the demographic evolution of Portugal recently generated a decrease on the demand for public educational services. This situation has raised doubts about the true contribution of this type of school for the public education system. This paper aims at answering this question by isolating the impact of different property and management schemes on the performance of students, resorting to cross-section data on 9th grade students from 2010. The results corroborate the well known result on the relevance of the family socio-economic background for students’ performance, but do also sustain the existence of a significant positive impact of private ownership and management schemes on the overall performance of students. These results suggest that there might be gains associated with the expansion of such schemes within the public education system.

The effects of cultural heritage on residential property values: Evidence from Lisbon, Portugal

This paper examines the impact of historic amenities on residential housing prices in the city of Lisbon, Portugal. Our study is directed towards identifying the spatial variation of amenity values for churches, palaces, lithic (stone) architecture and other historic amenities via the housing market, making use of both global and local spatial hedonic models. Our empirical evidence reveals that different types of historic and landmark amenities provide different housing premiums. While having a local non-landmark church within 100 meters increases housing prices by approximately 4.2%, higher concentrations of non-landmark churches within 1000 meters yield negative effects in the order of 0.1% of prices with landmark churches having a greater negative impact around 3.4%. In contrast, higher concentration of both landmark and non-landmark lithic structures positively influence housing prices in the order of 2.9% and 0.7% respectively. Global estimates indicate a negative effect of protected zones, however this significance is lost when accounting for heterogeneity within these areas. We see that the designation of historic zones may counteract negative effects on property values of nearby neglected buildings in historic neighborhoods by setting additional regulations ensuring that dilapidated buildings do not damage the city’s beauty or erode its historic heritage. Further, our results from a geographically weighted regression specification indicate the presence of spatial non-stationarity in the effects of different historic amenities across the city of Lisbon with variation between historic and more modern areas.

Return on assets in the Tobacco Industry analysis of the four main Tobacco Manufacturers

This paper studies operating profitability drivers in the Four Main Tobacco Manufacturers for the period 2004-2014. The operating profitability is analyzed as return on assets (ROA) based on the DuPont Extended Model breakdown in degree of operational risk, gross sales margin and assets turnover. The sources of ROA are market share and price strategies appraised through the drivers: firm-size, global value and strategic choices. Using consolidated data, results suggest that firm-size and global value holds a positive relationship with ROA. Also innovation through less harmful tobacco products can lead to better ROA despite no correlation between R&D and ROA.

Valuing an offshore exploration project through real options analysis

This thesis applied real options analysis to the valuation of an offshore oil exploration project, taking into consideration the several options typically faced by the management team of these projects. The real options process is developed under technical and price uncertainties, where it is considered that the mean reversion stochastic process is more adequate to describe the movement of oil price throught time. The valuation is realized to two case scenarios, being the first a simplified approach to develop the intuition of the used concepts, and the later a more complete cases that is resolved using both the binomial and trinomial processes to describe oil price movement. Real options methodology demonstrated to be capable of assessing and valuing the projects options, and of overcoming common capital budgeting methodologies flexibility limitation. The added value of the application of real options is evident, but so is the method's increased complexity, which adversely influence its widespread implementation.

Structure-property relationships in polymer nanocomposites

Tese de Doutoramento em Ciência e Engenharia de Polímeros e Compósitos

Quality costs analysis: case study in the automotive industry

Dissertação de mestrado integrado em Engenharia e Gestão Industrial

Flood analysis of the clare river catchment considering traditional factors and climate change

The main objective of this thesis on flooding was to produce a detailed report on flooding with specific reference to the Clare River catchment. Past flooding in the Clare River catchment was assessed with specific reference to the November 2009 flood event. A Geographic Information System was used to produce a graphical representation of the spatial distribution of the November 2009 flood. Flood risk is prominent within the Clare River catchment especially in the region of Claregalway. The recent flooding events of November 2009 produced significant fluvial flooding from the Clare River. This resulted in considerable flood damage to property. There were also hidden costs such as the economic impact of the closing of the N17 until floodwater subsided. Land use and channel conditions are traditional factors that have long been recognised for their effect on flooding processes. These factors were examined in the context of the Clare River catchment to determine if they had any significant effect on flood flows. Climate change has become recognised as a factor that may produce more significant and frequent flood events in the future. Many experts feel that climate change will result in an increase in the intensity and duration of rainfall in western Ireland. This would have significant implications for the Clare River catchment, which is already vulnerable to flooding. Flood estimation techniques are a key aspect in understanding and preparing for flood events. This study uses methods based on the statistical analysis of recorded data and methods based on a design rainstorm and rainfall-runoff model to estimate flood flows. These provide a mathematical basis to evaluate the impacts of various factors on flooding and also to generate practical design floods, which can be used in the design of flood relief measures. The final element of the thesis includes the author’s recommendations on how flood risk management techniques can reduce existing flood risk in the Clare River catchment. Future implications to flood risk due to factors such as climate change and poor planning practices are also considered.

Structural inferences from first-price auction experiments

We use structural methods to assess equilibrium models of bidding with data from first-price auction experiments. We identify conditions to test the Nash equilibrium models for homogenous and for heterogeneous constant relative risk aversion when bidders private valuations are independent and uniformly drawn. The outcomes of our study indicate that behavior may have been affected by the procedure used to conduct the experiments and that the usual Nash equilibrium model for heterogeneous constant relative risk averse bidders does not consistently explain the observed overbidding. From an empirical standpoint, our analysis shows the possible drawbacks of overlooking the homogeneity hypothesis when testing symmetric equilibrium models of bidding and it puts in perspective the sensitivity of structural inferences to the available information.