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Does Entry Remedy Collusion? Evidence from the Generic Prescription Drug Cartel / Amanda Starc, Thomas G. Wollmann.
- Format:
- Book
- Author/Creator:
- Starc, Amanda.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w29886.
- NBER working paper series no. w29886
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- Entry represents a fundamental threat to cartels. We study the extent and effect of this behavior in the largest price-fixing case in US history, which involves generic drug manufacturing. We link information on the cartel's internal operations to regulatory filings and market data. There is a substantial increase in entry after cartel formation but regulatory approvals delay most entrants by 2-4 years. We then estimate a structural model to simulate counterfactual equilibria. Absent entry, cartel profits would be dramatically higher. Correspondingly, reducing regulatory delays by just 1-2 years equates to consumer compensating variation of $559 million-$1.3 billion.
- Notes:
- Print version record
- March 2022.
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