Javier Brugues - Website
Paper title - 'The Effects of Public Procurement on Medicine Supply'
Research: Pharmaceutical markets in many middle-income countries are characterized by having large public and private sectors that coexist. The same set of firms often serves both sectors, creating dependencies in the firms' decisions across sectors that affect medicine supply. Using a novel dataset from Ecuador, I provide evidence that firms' pricing decisions in the public and private sectors indeed respond to cross-sector incentives. To study the forces behind firms' behavior, I develop and estimate a model in which firms compete in auctions in the public sector and in prices in the private market. I use the model to quantify the effects of increasing the number of participants in the auction, changing the reserve prices, and introducing local-preference rules in the auction on the supply decisions in both sectors. The results highlight the importance of competition over other aspects of the auction design. Increasing competition in the auction not only decreases the prices paid by the government but can also reduce prices in the private market and increase access to medicines.
Primary: Industrial organization, Development Economics
Secondary: Public Economics
- Professor Pedro Carneiro
- Professor Aureo De Paula
- Professor Orazio Attanasio