Pharmaceutical Generics, Vertical Product Differentiation, and Public Policy

This paper studies oligopolistic competition in off-patent pharmaceutical markets using a vertical product differentiation model. This model can explain the observation that countries with stronger regulations have smaller generic market shares. It can also explain the differences in observed regulatory regimes. Stronger regulation may be due to a higher proportion of production that is done by foreign firms. Finally, a closely related model can account for the observed increase in prices by patent owners after entry of generic producers.

How accurate are surveyed preferences for public policies? Evidence from a unique institutional setup

Opinion polls are widely used to capture public sentiments on a varietyof issues. If citizens are unwilling to reveal certain policy preferences toothers, opinion polls may fail to characterize population preferences accurately.The innovation of this paper is to use unique data to measurebiases in opinion polls for a broad range of policies. I combine data on184 referenda held in Switzerland between 1987 and 2007, with postballotsurveys that ask for each proposal how the citizens voted. Thedifference between stated preferences in the survey and revealed preferences at the ballot box provides a direct measure of bias in opinion polls.I find that these biases vary by policy areas, with the largest ones occurring in policies on immigration, international integration, and votesinvolving liberal/conservative attitudes. Also, citizens show a tendencyto respond in accordance to the majority.

Globalization and the provision of incentives inside the firm: The effect of foreign competition

This paper studies the effect of changes in foreign competition on the structureof compensation and incentives of U.S. executives. We measure foreign competitionas import penetration and use tariffs and exchange rates as instrumental variables toestimate its causal effect on pay. We find that higher foreign competition leads tomore incentive provision in a variety of ways. First, it increases the sensitivity of payto performance. Second, it increases whithin-firm pay differentials between executivelevels, with CEOs typically experiencing the largest wage increases, partly becausethey receive the steepest incentive contracts. Finally, higher foreign competition is alsoassociated with a higher demand for talent. These results indicate that increased foreigncompetition can explain some of the recent trends in compensation structures.

Pharmaceutical generics, vertical product differentiation and public policy

This paper studies oligopolistic competition in off-patent pharmaceuticalmarkets using a vertical product differentiation model. This model canexplain the observation that countries with stronger regulations havesmaller generic market shares. It can also explain the differences inobserved regulatory regimes. Stronger regulation may be due to a higherproportion of production that is done by foreign firms. Finally, a closelyrelated model can account for the observed increase in prices by patentowners after entry of generic producers.

A medium-scale open economy model of Australia

We estimate an open economy dynamic stochastic general equilibrium (DSGE)model of Australia with a number of shocks, frictions and rigidities, matching alarge number of observable time series. We find that both foreign and domesticshocks are important drivers of the Australian business cycle.We also find that theinitial impact on inflation of an increase in demand for Australian commoditiesis negative, due to an improvement in the real exchange rate, though there is apersistent positive effect on inflation that dominates at longer horizons.

Trade liberalization in Uruguay: Domestic and foreign firms

The reallocation of resources is one of the main impacts of tradeliberalization processes. In the case of manufacturing industries resourceswill be reallocated from import--competing sectors to export--orientedsectors. This paper studies the effects that a more open economic environmenthas had on the entry conditions for foreign and domestic firms in Uruguayanmanufacturing industries. We find significant differences in the behaviorof foreign and domestic firms, both when they are incumbents or when theyact as potential entrants. In general, foreign firms seem to be moresuccessful in applying entry deterring strategies, due to advantages inforeign markets, deeper financial resources or better technological capabilities.They also appear to be more responsive to entry conditions when theyface the prospects of entering a given industry.

A two-level analysis of the determinants of direct democratic choices in European, immigration and foreign policy in Switzerland

This article employs a unique data set - covering 25 popular votes on foreign, European and immigration/asylum policy held between 1992 and 2006 in Switzerland - in order to examine the conditional impact of context upon utilitarian, cultural, political and cognitive determinants of individual attitudes toward international openness. Our results reveal clear patterns of cross-level interactions between individual determinants and the project-related context of the vote. Thus, although party cues and political competence have a strong impact on individuals' support for international openness, this impact is substantially mediated by the type of coalition that is operating within the party elite. Similarly, subjective utilitarian and cultural considerations influence the voters' decision in interaction with the content of the proposal submitted to the voters as well as with the framing of the voting campaign.