Please use this identifier to cite or link to this item: http://hdl.handle.net/10071/27838
Author(s): Mello-Sampayo, F. de.
Vale, S. de S.
Camões, F.
Date: 2013
Title: Substitutability between drugs, innovation and growth in the pharmaceutical industry
Book title/volume: 10th EBES Conference Proceedings
Pages: 13 - 28
Event title: 10th EBES Conference
Reference: Mello-Sampayo, F. de., Vale, S. de S., & Camões, F. (2013). Substitutability between drugs, innovation and growth in the pharmaceutical industry. In 10th EBES Conference (pp. 17-28). EBES.
ISBN: 978-605-64002-1-6
Keywords: Monopolistic competition
Pharmaceutical industry
Fiscal policy
Abstract: This paper establishes a relationship between the elasticity of demand for pharmaceutical intermediates and the growth rate for these intermediates variety. We build a model that contains two sectors, one final good sector producing treatments, and one intermediate goods sector producing a differentiated input used in the final treatment. The effects on the medicaments varieties' growth rate of the introduction of a fiscal instrument over pharmaceutical producers' profits are discussed. When the fiscal instrument is a tax over intermediate firms' profits, R&D by firms in the pharmaceutical goods sector results in positive growth provided there is enough substitutability among intermediates assured by a patent system. Otherwise, a subsidy over pharmaceutical firms' profits should be considered to generate positive growth of innovation in medicaments.
Peerreviewed: yes
Access type: Open Access
Appears in Collections:BRU-CRI - Comunicações a conferências internacionais

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