The Council and the European Parliament

"We analyze the effects of the unprecedented rise in trade between Germany and 'the East' - China and Eastern Europe - in the period 1988-2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of 'the East' in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 493,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. We also conduct our analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships." (Author's abstract, IAB-Doku) ((en))

The Rise of the East and the Far East: German Labor Markets and Trade Integration

https://www.dice.hhu.de/fileadmin/redaktion/Fakultaeten/Wirtschaftswissenschaftliche_Fakultaet/DICE/Discussion_Paper/065_Fonseca_Normann.pdf

Explicit vs. Tacit Collusion – The Impact of Communication in Oligopoly Experiments

This paper discusses the general characteristics of online markets from a competition theory perspective and the implications for competition policy. Three important Internet markets are analyzed in more detail: search engines, online auction platforms, and social networks. Given the high level of market concentration and the development of competition over time, we use our theoretical insights to examine whether (a) leading Internet platforms have non-temporary market power and, based on this analysis, (b) whether any specific market regulation beyond general competition law rules is warranted in these three online markets.

/pdf/google-facebook-amazon-ebay-is-the-internet-driving-4pb5gz8unr.pdf

Google, Facebook, Amazon, eBay: Is the internet driving competition or market monopolization?

This study analyses the effectiveness of targeted public support for R&D investment. In particular, we test whether the specific policy design aiming at incentivizing (international) collaboration and R&D in small and medium sized firms achieves the desired objectives on input as well as output additionality. Our results show that the targeted R&D subsidies accelerate R&D spending in the private sector, and especially so in the targeted groups. Further, we differentiate between privately financed R&D and subsidy-induced R&D investment to evaluate their respective effects on innovation performance. The results confirm that the induced R&D is productive as it translates into marketable product innovations. While both types of R&D investments trigger significant output effects, we find that the effect of subsidy-induced R&D investment is higher for firms that collaborate internationally as well as for SMEs.

/pdf/international-r-d-collaboration-and-smes-the-effectiveness-jib90w0ek6.pdf

(International) R&D Collaboration and SMEs: The Effectiveness of Targeted Public R&D Support Schemes

Many countries with national health care providers and health insurances regulate the market for pharmaceuticals to steer drug demand and to control expenses. For example, they introduce reference pricing or tiered co-payments to enhance drug substitution and competition. Since 2006, Germany follows an innovative approach by differentiating drug co-payments by the drug's price relative to its reference price. In this two-tier system, prescription drugs are completely exempted from co-payments if their prices undercut a certain price level relative to the reference price. We identify the effect of the policy on the prices of all affected prescription drugs and differentiate the analysis by firm types (innovative, generic, branded generic or importing firms). To identify a causal effect, we use a differences-in-differences approach and additionally exploit the fact that the exemption policy had been introduced successively in the different clusters. We use quarterly data from 2007 to 2010 and find empirical evidence for differentiated price setting strategies by firm types, ranging from price decreases of -13.1% (branded generics firms) to increases of +2.0% (innovators) following the introduction of potential reductions in co-payments. We refer to the latter result as the co-payment exemption paradox. Our competition proxy (no. of firms) suggests a significant but small negative correlation with prices.

https://www.econstor.eu/bitstream/10419/57630/1/690258666.pdf

Pharmaceutical Prices under Regulation: Tiered Co-payments and Reference Pricing in Germany

We investigate the welfare impact of parallel imports using a large panel data set containing monthly information on sales, ex-factory prices, and further product characteristics for all 700 anti-diabetic drugs sold in Germany between 2004 and 2010. We estimate a two-stage nested logit model of demand and, based on an oligopolistic model of multiproduct firms, we then recover the marginal costs and markups. We finally evaluate the effect of the parallel importsâ€™ policy by calculating a counter-factual scenario without parallel trade. According to our estimates, parallel imports reduce the prices for patented drugs by 11% and do not have a significant effect on prices for generic drugs. This amounts to an increase in the demand-side surplus by e19 million per year (or e130 million in total) which is relatively small compared to the average annual market size of around e227 million based on ex-factory prices. The variable profits for the manufacturers of original drugs from the German market are reduced by e18 million (or 37%) per year when parallel trade is allowed, yet only one third of this difference is appropriated by the importers.

The welfare impact of parallel imports: A structural approach applied to the German market for oral anti-diabetics

We investigate the welfare impact of parallel imports using a large panel dataset containing monthly information on sales, ex-factory prices, and further product characteristics for all 649 anti-diabetic drugs sold in Germany between 2004 and 2010. We estimate a two-stage nested logit model of demand, and on the basis of an oligopolistic model of multi-product firms, we then recover the marginal costs and markups. We finally evaluate the effect of the parallel imports' policy by calculating a counterfactual scenario without parallel trade. According to our estimates, parallel imports reduce the prices for patented drugs by 11% and do not have a significant effect on prices for generic drugs. This amounts to an increase in the demand-side surplus by €19 million per year (or €130 million in total), which is relatively small compared with the average annual market size of around €227 million based on ex-factory prices. The variable profits for the manufacturers of original drugs from the German market are reduced by €18 million (or 37%) per year when parallel trade is allowed, yet only one third of this difference is appropriated by the importers.

/pdf/the-welfare-impact-of-parallel-imports-a-structural-approach-2gsp7214jh.pdf

Diese Studie zeigt, dass die Maximierung der sozialen Wohlfahrt, also die Verfugbarkeit von innovativen und gunstigen Produkten in Europa, durch eine Korrektur der tatsachlichen Abgabepreise in anderen Landern gemas der wirtschaftlichen Leistungsfahigkeit [und nicht nur des Preisniveaus] erreicht werden kann. Die im Rahmen des AMNOG vorgesehene europaische Preisreferenzierung fur innovative Arzneimittel in Deutschland macht durch eine Gewichtung mit dem BIP pro Kopf eine wohlfahrtsoptimale europaische Preisgestaltung moglich. Ergebnisse einer Berechnung am Beispiel des Onkologikums Zytiga® [Abirateronacetat] zeigen, dass europaische Arzneimittelpreisdifferenzen von bis zu 38% moglich sind, ohne den Referenzpreis in Deutschland unter ein sozial optimales Niveau zu senken.

Moritz Suppliet

Papers

Pharmaceutical Prices under Regulation: Tiered Co-payments and Reference Pricing in Germany

The welfare impact of parallel imports: A structural approach applied to the German market for oral anti-diabetics

The welfare impact of parallel imports: A structural approach applied to the German market for oral anti-diabetics

Vergleichbarkeit internationaler Arzneimittelpreise: Internationale Preisreferenzierung in Deutschland durch das AMNOG

Tiered co-payments, pricing, and demand in reference price markets for pharmaceuticals