Abstract Many countries with national health care providers and health insurances regulate the market for pharmaceuticals to steer drug demand and to control expenses. For example, they introduce reference pricing or tiered co-payments to enhance drug substitution and competition. Since 2006, Germany follows an innovative approach by dierentiating drug copayments by the drug's price relative to its reference price. In this two-tier system, prescription drugs are completely exempted from co-payments if their prices undercut a certain price level relative to the reference price. We identify the eect of the policy on the prices of all aected prescription drugs and dierentiate the analysis by rm types (innovative, generic, branded generic or importing rms). To identify a causal eect, we use a dierences-in-dierences approach and additionally exploit the fact that the exemption policy had been introduced successively in the dierent clusters. We use quarterly data from 2007 to 2010 and nd empirical evidence for dierentiated price setting strategies by rm types, ranging from price decreases of -13.1% (branded generics rms) to increases of +2.0% (innovators) following the introduction of potential reductions in co-payments. We refer to the latter result as the co-payment exemption paradox. Our competition proxy (no. of rms) suggests a signicant but small negative correlation with prices. JEL: D22, D40, I18, I11, L11

Abstract This paper investigates the degree of fixed-mobile call substitution (FMCS). We use quarterly data from 2004 to mid 2010 on 16 mainly Western European countries. By applying dynamic panel data techniques, we are able to estimate shortand long-run elasticities. The own-price and cross-price elasticities found give strong empirical evidence for substitutional effects towards mobile services. In particular, the estimated cross-price elasticities of the mobile price on the fixed line call demand are relatively large compared to other studies.

Abstract Increasing price levels, high price volatility and the suspicion of collusive behavior are important topics of public debates on competition in retail gasoline markets in many countries. Several governments and competition authorities introduced fuel price regulations in form of restrictions on the frequencies of fuel price changes per day. We present empirical evidence of the effects of fuel price regulation in Austria and Western Australia using difference-in-differences methods to estimate treatment effects of the implementation of such pricing rules. Our estimates provide evidence that fuel price levels in Austria decreased after implementation of regulation. However, we cannot find robust significant effects of regulation on fuel price levels in Western Australia.

Abstract This paper analyzes the effect of inter urban buses competing on a few routes against trains within an established railway network. In line with expectations, we show that this can lead to unprofitable train service on these routes. However, within an established railway network with every track being profitable, competition on just some tracks can result in a collapse of the entire network. External effects of individual routes on the railway network are fundamental for the profitability of the network. Hence, weakening these network effects might be crucial. As a result, efficient intermodal competition on some routes might cause the abandoning of other routes that are not facing any competition. This effect has to be taken into account by political actors when liberalization of inter urban bus travel is considered.

Abstract In this paper we investigate the existence of a two-tier medical system in the German acute care hospital sector using data from a survey of 483 German hospitals. The focus of our analysis lies on the impact of hospital concentration on the probability of discrimination of patients with different health insurances in regard to the access to medical services. Accounting for a possible endogeneity of market structure, we find that hospitals in highly concentrated markets are less likely to pursue any differentiation among prospective patients with different health insurances. We ascribe this finding to competitive pressure in less concentrated markets. Hospitals in competitive markets are more obliged to steal business from rival hospitals by privileging profitable patients than hospitals in highly concentrated markets.

Abstract This paper analyzes private precautions against crime when the value of the property to be protected is private information. In a framework in which potential criminals can choose between different crime opportunities, we establish that decentralized decision-making by potential victims may lead to suboptimal levels of investment in private protection. This outcome is possible when observable precautions inform potential offenders about the value at risk even when the diversion effect due to private safety measures is taken into account.

Abstract We analyze the effects of cartel policies on firm behavior using data from the German powercable cartel. Antitrust authorities affected the cartel under two different legal regimes: penalizing the cartel in some years, and exempting it for ten years from the general cartel prohibition. While penalties did not reduce prices or profits, making collusion legal raised profits by at least 16% each year, compared to the time when the illegal cartel was not prosecuted. The threat of penalties was sufficient to reduce profit from collusion. The intended efficiency gains from rationalization, which was the justification for legalizing the cartel, did not materialize. * We are grateful to a referee for detailed and helpful comments. We are also indebted to John Connor, seminar

Abstract This paper studies unshrouding decisions in a framework similar to

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may Abstract This papers analyses how horizontal mergers affect innovation activities of the merged entity and its non-merging competitors. We develop an oligopoly model with heterogeneous firms to derive empirically testable implications. Our model predicts that a merger is more likely to be profitable in an innovation intensive industry. For a high degree of firm heterogeneity a merger reduces innovation in both the merged entity and in non-merging competitors in an industry with high R&D intensity. Using data on horizontal mergers among pharmaceutical firms in Europe, we find that our econometric results are consistent with many predictions of the theoretical model. Our main result is that after a merger patenting and R&D of the merged entity and its non-merging rivals declines substantially. The results are robust towards alternative specifications and using an instrumental variable strategy. JEL codes: D43, D22, O31, G34

Abstract There has been vast interest in the distribution of city sizes in an economy, but this research has largely neglected that cities also differ along another fundamental dimension: age. Using novel data on the foundation dates of more than 10,000 American cities, we find that older cities in the US tend to be larger than younger ones. To take this nexus between city age and city size into account, we introduce endogenous city creation into a dynamic economic model of an urban system. The city size distribution that emerges in our economy delivers a close fit to different types of US city size data. This evidence can resolve several recent debates, and build a bridge between different views in the literature on city size distributions.