Vaccine Supply: Effects of Regulation and Competition

46 Pages Posted: 11 Jul 2011 Last revised: 17 Aug 2011

See all articles by Patricia M. Danzon

Patricia M. Danzon

University of Pennsylvania - Health Care Systems Department; National Bureau of Economic Research (NBER)

Nuno Sousa Pereira

University of Pennsylvania - The Wharton School; Universidade do Porto

Date Written: July 2011

Abstract

In US vaccine markets, competing producers with high fixed, sunk costs face relatively concentrated demand. The resulting price and quality competition leads to the exit of all but one or very few producers per vaccine. Our empirical analysis of exits from US vaccine markets supports the hypothesis that high fixed costs and both price and quality competition contribute to vaccine exits. We find no evidence that government purchasing has significant effects, possibly because government purchase tends to increase volume but lower price, with offsetting effects. Evidence from the flu vaccine market confirms that government purchasing is not a necessary condition for exits and the existence of few suppliers per vaccine in the US.

Suggested Citation

Danzon, Patricia M. and Sousa Pereira, Nuno, Vaccine Supply: Effects of Regulation and Competition (July 2011). NBER Working Paper No. w17205. Available at SSRN: https://ssrn.com/abstract=1882173

Patricia M. Danzon (Contact Author)

University of Pennsylvania - Health Care Systems Department ( email )

3641 Locust Walk
Colonial Penn Center
Philadelphia, PA 19104-6358
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Nuno Sousa Pereira

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States
215-893-8682 (Phone)

Universidade do Porto ( email )

Rua Dr. Roberto Frias
4200-464 Porto
Portugal

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