Vaccine Supply: Effects Of Regulation And Competition

Patricia M. Danzon, Nuno S. Pereira

NBER Working Paper No. 17205
Issued in July 2011
NBER Program(s):Health Care, Health Economics

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.

A non-technical summary of this paper is available in the 2011 number 3 issue of the NBER Bulletin on Aging and Health. You can sign up to receive the NBER Bulletin on Aging and Health by email.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w17205

Published: Patricia Danzon & Nuno Sousa Pereira, 2011. "Vaccine Supply: Effects of Regulation and Competition," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 18(2), pages 239-271. citation courtesy of

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