Working Paper: NBER ID: w17205
Authors: Patricia M. Danzon; Nuno S. Pereira
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. \n \nWe 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.
Keywords: Vaccine Supply; Regulation; Competition; Market Exit
JEL Codes: D4; I11; I18; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| number of competitors (L13) | hazard of exit (J63) |
| entry of new competitors (L13) | hazard of exit (J63) |
| sole suppliers (L67) | hazard of exit (J63) |
| government procurement (H57) | firms' willingness to remain in the market (L11) |
| competition (L13) | lower prices (P22) |
| competition (L13) | survival of sole suppliers (D42) |