This seminar will take place on March 7, 2025 at 15:00. The seminar will be in a hybrid format with:
- in-person session in the IST Alameda Campus, Department of Engineering and Management's Meeting Room
- online, via Zoom https://videoconf-colibri.zoom.us/j/96359072153?pwd=eIQvM6PoTZPyboLK5a59nRsgs7VRpz.1
Our seminars are free to attend and open to everyone. Please share with whomever may be interested.
Summary
Firms' interaction across markets, defined as multimarket contacts (MMC), have been shown to decrease within-market competition. This paper evaluates whether the effects of MMC span beyond within-market action and also influence market participation decisions, in the Portuguese off-patent drug market. It is shown that the potential of MMC to enhance collusion may depend on the ability of these contacts to restore an overall symmetry between companies which may fail to be observed in individual markets. As existing empirical MMC measures fail to account for this, this paper puts forward a theory-founded measure which weights contacts between companies by their importance in smoothing market share asymmetries. Based on the proposed measure, it is tested whether pharmaceutical firms with greater MMC have greater survival chances in individual markets. Resorting to linear probability models with fixed effects and conditional logit models, it is shown that when the unit of analysis is the firm-in-market (i.e., a firm in a given market) higher MMC do not influence pharmaceutical firms' survival chances in individual markets. Nonetheless, when the unit of analysis is a market, higher average MMC between companies active in a market are associated with a lower probability of observing firms' exit from that market: if MMC in a given market increase by one unit, the probability of observing at least one firm exit the market over the course of one year decreases by 1.14 percentage points. These distinct results suggest that the degree of mutual forbearance is essentially a feature of the individual market under consideration, and not a characteristic of inter-firm rivalry independent of the level of competition faced by other competitors in the market.
Speaker's bio
Carolina Santos is a postdoctoral researcher in Health Economics at the Nova Health Economics & Management Knowledge Center, Nova School of Business and Economics. She holds a Ph.D. in Economics from the Nova School of Business and Economics, and her research focuses on issues related to competition and regulation in the pharmaceutical market, as well as on population access to healthcare, especially in the context of demographic aging. Currently, she is collaborating on the international project "Capacity building to support the uptake of biosimilars in a multistakeholder approach", funded by the European Health and Digital Executive Agency. Carolina Santos has teaching experience at the undergraduate and postgraduate levels and has worked in consultancy in the field of Health Economics and Outcomes Research. Recently, she was involved in the project "Enhancing cooperation & quality of public administration: Support for strengthening health cost accounting in Portugal", funded by the European Union via the Structural Reform Support Programme.
Personal homepage: https://www.linkedin.com/in/carolina-borges-santos/