With public services such as health and education, it is not straightforward for consumers to assess the quality of provision. Many such services are provided by monopoly not-for-profit providers and there is concern that for-profit providers may increase profit at the expense of quality. This paper explores whether entry by for-profit providers is good for consumers despite the problem of unobserved quality. The model generates three key policy-relevant insights. First, by developing a novel approach to competition between different organizational forms, it frames the relevant trade-offs precisely. Second, it shows the value of keeping an incumbent not-for-profit as an active provider. Third, it characterizes the optimal payment (or voucher value) to an entrant for each consumer who switches in a way that can be applied empirically.
On the Effect of Parallel Trade on Manufacturers’ and Retailers’ Profits in the Pharmaceutical SectorFebruary 14, 2018
Differences in regulated pharmaceutical prices within the European Economic Area create arbitrage opportunities that pharmacy retailers can use through parallel imports. For prescription drugs under patent, such provision decisions affect the sharing of profits among an innovating pharmaceutical company, retailers, and parallel traders.
We develop a structural model of demand and supply in which retailers can choose the set of goods to sell to consumers, thus foreclosing the consumers’ access to some less-profitable drugs, which allows retailers to bargain and obtain lower wholesale prices with the manufacturer and parallel trader. With detailed transaction data, we identify a demand model with unobserved choice sets using supply-side conditions for optimal assortment decisions of pharmacies. Estimating our model, we find that retailer incentives play a significant role in fostering parallel trade penetration. Our counterfactual simulations show that parallel imports of drugs allows retailers to gain profits at the expense of the manufacturer, whereas parallel traders also gain but earn more modest profits. Finally, a policy preventing pharmacies from foreclosing the manufacturer’s product is demonstrated to partially shift profits from pharmacists to both the parallel trader and the manufacturer, and a reduction in the regulated retail price favors the manufacturer even more.
Pregnancy as a Normal Condition of Employment: Comparative and Role-Based Accounts of DiscriminationFebruary 14, 2018
As the Pregnancy Discrimination Act of 1978 (PDA) turns forty, it is time to consider how we define pregnancy discrimination.
In recent years, courts have come to define pregnancy discrimination almost exclusively through comparison. Yet our understanding of discrimination, inside and outside the pregnancy context, depends on judgments about social roles as well as comparison. In enacting the PDA, Congress repudiated employment practices premised on the view that motherhood is the end of women’s labor force participation, and affirmed a world in which women as well as men would combine work and family—a world in which pregnancy would be a normal condition of employment. A social-roles analytic helps explain the logic of pregnancy discrimination, whether it assumes the form of hostility to pregnant workers or a simple failure to accommodate.
Drawing on this social-roles analytic, the Lecture offers a reading of Young v. UPS, the Supreme Court’s most recent decision on the PDA. Young breaks from an exclusively comparative approach and authorizes pregnancy accommodation claims under both disparate treatment and disparate impact frameworks. The Court’s approach is informed by a growing popular consensus. As the PDA turns forty, nearly half the states have enacted pregnant worker fairness acts supporting reasonable accommodation of pregnancy in the workplace.
Competition policy is there to promote competition in order to lower prices and enhance economic efficiency. It does so by challenging business conduct deemed anticompetitive. The purpose of this essay is to address two questions. First: Does competition policy really promote competition? Second: Does competition really lower prices and does it enhance efficiency? The problem with competition policy is that it often promotes competition in a narrow sense, but stands in the way of competition in a broader sense. Moreover, after a century of sharpening the pencil its enforcement criteria remain as ambiguous as ever, giving rise to substantial legal uncertainty. The problem with competition itself is that it does not always work the way it should. What makes competition often ineffective is economies of scale, particularly mass production. Unfortunately, mass production is far more effective than competition itself in both lowering prices and enhancing efficiency. What makes it worse is that the main adversary of competition policy, big business, happens to be the main ally of mass production. In that respect, competition policy may be winning some battles now and then, but is waging a lost war.
Richardson’s Law says that the relationship between the size of violent wartime events and their frequency is characterized by a simple probability distribution called a power law. Power law distributions have been found in both civil war violence and terrorist attacks and have recently served as the foundation for novel theories of conflict, solutions to missing data problems, and prediction models. This note revisits Richardson’s Law in light of recent data collection efforts, looking at all relevant micro-level conflict event data publicly available in the world today (685,000 events across 16 data sets). I find substantially less support for Richardson’s Law than past research, suggesting serious caveats to claims about its universal nature. By identifying new stylized facts about the heavy-tailed nature of violence, this note lays the groundwork for more nuanced analyses of conflict severity.
I study job lock and job push, the twin phenomena believed to be caused by employment-contingent health insurance (ECHI). Using variation in Medicaid eligibility among household members of male workers as a proxy for shifts in workers’ dependence on employment for health insurance, I estimate large job lock and job push effects. For married workers, Medicaid eligibility for one household member results in an increase in the likelihood of a voluntary job exit over a four-month period by approximately 34%. For job push, the transition rate into jobs with ECHI among all workers falls on average by 26%.
Almost 100 years ago the US Supreme Court opined that children are “not mere creatures of the state”, noting that parents should be the final arbiter of what is best for each child in the vast majority of cases. Yet this principle falls strangely short in protecting the rights of parents when addressing concerns surrounding certain forms of sexuality education in public school. This article argues that the sex education by necessity is freighted with moral meaning and to many parents that meaning has religious significance. I attempt to persuade the reader that because of the religious dimensions of our understanding of human sexuality a robust conception of religious liberty requires public schools to allow parental control over the sex education of children and that doing so poses little or no threat to legitimate state interests in education, health and public safety.