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- Reference pricing with elastic demand for pharmaceuticalsPublication . Gonçalves, Ricardo; Rodrigues, VascoIn this paper, we re‐examine the properties of two commonly adopted government reimbursement schemes for pharmaceuticals: reference pricing and fixed percentage reimbursement. We depart from the previous literature by assuming that the individual demand is price‐sensitive and depends on the copayment rate (i.e., the part paid by each consumer). We obtain two novel results under reference pricing: first, as the copayment rate increases, so do pharmaceutical prices; second, this increase in pharmaceutical prices reduces social welfare. Whilst reference pricing does emerge as a preferable reimbursement scheme, demand elasticities and the copayment rate interact in complex ways. This leads (unexpectedly) to the possibility that a higher copayment rate (lower reimbursement rate) results in higher government expenditure.
- Business model adaptation in response to an exogenous shock: an empirical analysis of the Portuguese footwear industryPublication . Corbo, Leonardo; Pirolo, Luca; Rodrigues, VascoBusiness models have received increasing attention in both academic and managerial communities. However, little attention has been paid to how business models change in response to extreme events. This topic is of critical importance since failure to achieve adaptation in a timely manner can lead to negative consequences such as a significant decrease in firm value or bankruptcy. This study explores how the business model paradigm of the Portuguese footwear industry changed following China’s entry into the World Trade Organization in 2001. The empirical results suggest that the shock acted as a trigger for change for the Portuguese footwear firms which reflected in the adoption of a new business model characterized by speed and flexibility in the manufacturing process, faster response to customer needs and, in specific cases, in downward integration through the creation of own brands selling directly to final consumers. This result, however, was not the outcome of a sudden change but rather the consequence of a planned adaptation strategy led by a key industry actor that acted as a network orchestrator coordinating the actions of the Portuguese footwear firms. The implications of these findings as well as directions for future research are discussed in the last part of this study.
- Reference pricing with elastic demand for pharmaceuticalsPublication . Gonçalves, Ricardo; Rodrigues, VascoThis paper analyzes pharmaceutical producers (of branded and generic drugs) pricing de- cisions in a context which combines the classical Hotelling framework (commonly adopted in the literature) with the possibility that consumers demands are price elastic. We analyze with particular interest two commonly adopted reimbursement mechanisms: xed percentage reim- bursement (FPR) and reference pricing (RP). We nd that assuming an elastic demand has a signi cant impact under a RP mechanism, as it allows rms to raise their prices when the copayment rate increases. Contrary to previous literature, we show that RP may be worse than FPR in terms of social welfare for su¢ ciently high copayment rates. From a policy viewpoint, our results indicate that the introduction of RP is not necessarily always bene cial (compared to FPR) and thus constitute a model towards which all reimbursement mechanisms should converge.
- Reference pricing in the presence of pseudo-genericsPublication . Gonçalves, Ricardo; Rodrigues, Vasco; Vasconcelos, HélderThis paper looks at producers of branded and generic pharmaceuticals’ pricing decisions under two possible reimbursement schemes—reference pricing and fixed percentage reimbursement—and under two settings—one where the branded producer only sells the (off-patent) branded pharmaceutical and another where, in addition, it may also sell its own generic version, a so called pseudo-generic. We find different pricing responses from firms under the two reimbursement schemes and across the two settings analysed (with or without a pseudo-generic), and show that pseudo-generics may have an anticompetitive effect. Our results have important policy implications such as showing that the presence of pseudogenerics reinforces reference pricing’s advantages over alternative reimbursement schemes
- Anti-competitive impact of pseudo-genericsPublication . Rodrigues, Vasco; Gonçalves, Ricardo; Vasconcelos, HélderIn pharmaceuticals markets, sellers of branded drugs sometimes sell generic versions of their own branded products, either directly or through licenseagreements. Although claims that these pseudo-generics may have anti-competitive effects are not unusual, the theoretical literature on this issue is limited and not conclusive. This paper uses a model that combines horizontal and vertical product differentiation, to explain how those effects may occur. We show that the producer of the branded product will not sell the pseudo-generic unless faced with competition and that, if she does so, in some circumstances, all prices rise to the benefit of all sellers and the detriment of consumers.
- Restructuring and merger wavesPublication . Rodrigues, VascoAlthough merger waves are one of the most important market structures shaping forces, they have been the object of little theoretical investigation in industrial economics. This paper explains how the occurrence of industry merger waves is determined by the interplay between the synergy opportunities offered by mergers and the possibility to free-ride other firms ' mergers market power effects. This explanation arises in the context of a two-stage model in which mergers are endogenously determined before firms compete in the product 's market. The endogenous market structure can either be excessively or insufficiently concentrated from a total surplus perspective.