Value appropriation in hepatitis C

Background In 2015, the Swedish government in an unprecedented move decided to allocate 150 million € to provide funding for new drugs for hepatitis C. This was triggered by the introduction of the first second generation of direct-acting antivirals (DAAs) promising higher cure rates and reduced side effects. The drugs were cost-effective but had a prohibitive budget impact. Subsequently, additional products have entered the market leading to reduction in prices and expansions of the eligible patient base. Methods We estimated the social surplus generated by the new DAAs in Stockholm, Sweden, for the years 2014–2019. The actual use and cost of the drugs was based on registry data. Effects on future health care costs, indirect costs and QALY gains were estimated using a Markov model based primarily on Swedish data and using previous generations of interferon-based therapies as the counterfactual. Results A considerable social surplus was generated, 15% of which was appropriated by the producers whose share fell rapidly over time as prices fell. Most of the consumer surplus was generated by QALY gains, although 10% was from reduced indirect costs. QALY gains increased less rapidly than the number of treated patients as the eligibility criteria was loosened. Conclusions The transfer of funds from the government to the regions helped generate substantial surplus for both consumers and producers with indirect costs playing an important role. The funding model may serve as a model for the financing of innovative treatments in the future.

Optimal Market-Integration Decisions by Policymakers: Modeling and Analysis of Agriculture Market Data

Policymakers often seek to integrate markets as a way to maximize social welfare. In this article, the authors consider the spectrum of all possible integration policies, from full isolation to complete integration, and characterize the socially optimal market integration, under general demands. They identify market conditions under which social surplus is indeed maximized at partial market integration. For the linear price-responsive demand model that is used extensively in the operations management literature, these conditions are identified as thresholds on (i) the relative size of the markets being integrated, and (ii) the relative price sensitivity of consumers in these markets. The authors then apply the model to the commercial seed market in the European Union (EU). Their analysis shows that socially optimal market integration for these countries provides a further improvement in the social surplus for the EU by 2.80%, relative to complete integration. Results show that policymakers should exercise caution in determining the extent to which markets are integrated.

Conclusion

Many people are worried about the fragmentation of labor markets, as firms replace employees with independent contractors. Another common worry is that low-skill work, and ultimately nearly all forms of work, will be replaced by robots as artificial intelligence advances. Labor market fragmentation is not a new phenomenon and can be addressed with stronger classification laws supplemented by antitrust enforcement. In fact, the gig economy has many attractive elements, and there is no reason to fear it as long as existing laws are enforced. Over the long run, artificial intelligence may replace much of the work currently performed by human beings. If it does, the appropriate response is not antitrust or employment regulation but policy that ensures the social surplus is fairly divided.

Market power and urban housing development

This paper investigates the relationship between market power and urban housing development in a two-period, partial equilibrium model of a durable rental housing market with a fixed stock of homogeneous land, a convex housing construction technology, and no externalities. We contrast the planning solution and the monopoly solution. Since we employ social surplus analysis, the competitive equilibrium coincides with the planning solution. Thus, we contrast the competitive equilibrium and the monopoly solution. On a priori grounds, one expects less housing to be produced under monopoly than under competition. The monopolist can produce less housing by constructing housing at lower density, holding land off the market, or developing his land later. We show that the monopolist: (i) will never hold land off the market for both periods, (ii) may develop either a higher or lower proportion of her land in the first period than under competition, and (iii) in both periods will construct at lower density than under competition.

Invitation Games: An Experimental Approach to Coalition Formation

This paper studies how to form an efficient coalition—a group of people. More specifically, we compare two mechanisms for forming a coalition by running a laboratory experiment and reveal which mechanism leads to higher social surplus. In one setting, we invite the subjects to join a meeting simultaneously, so they cannot know the other subjects’ decisions. In the other setting, we ask them sequentially, which allows each subject to know his or her predecessor’s choice. Those who decide to join the meeting form a coalition and earn payoffs according to their actions and individual preferences. As a result, we obtain the following findings. First, the sequential mechanism induces higher social surplus than the simultaneous mechanism. Second, most subjects make choices consistent with the subgame-perfect Nash equilibrium in the sequential setting and choose the dominant strategy in the simultaneous setting, when a dominant strategy exists. Finally, when the subjects need to look further ahead to make a theoretically rational choice, they are more likely to fail to choose rationally.

Re-Recognition of Ride-Sourcing Service: From the Perspective of Operational Efficiency and Social Welfare

With increasing availability of alternative mobility options for city transportation system, it is necessary to better understand how emerging mobility options are impacting the travel demand and consumer-social surplus. However, few study have been conducted to evaluate the social welfare effects of the range of vacant trips in ride-sourcing service modes. This paper identified the vacant trip and loading rate evaluation model under the ride-sourcing service mode to enhance the effective operation of the different mobility services under numerical illustrations. The solution can also offer some beneficial guidance and theoretical basis for ride-sourcing systems in regard to planning and management aspects.

Consistent Conjectural Variations Equilibrium in the Semi-Mixed Oligopoly

We study a variant of the mixed oligopoly model with conjectural variations equilibrium, in which one of the producers maximizes not his net profit but the convex combination of the latter with the domestic social surplus. The coefficient of this convex combination is named socialization level. The producers’ conjectures concern the price variations depending upon their production output variations. In this work, we extend the models studied before, considering the case of the producers’ cost functions being convex but not necessarily quadratic. The notion of exterior and interior equilibrium is introduced (similarly to previous works), developing a consistency criterion for the conjectures. Existence and uniqueness theorems are formulated and proven. Results concerning the comparison between conjectural variations, perfect competition, and Cournot equilibriums are provided. Based on these results, we formulate an optimality criterion for the election of the socialization level. The existence of the optimal socialization level is proven under the condition that the public company cannot be too weak as compared to the private firms.

Is Ride-sourcing Service Really Sustainable : Operational Efficiency and Social Welfare Analysis Through an Equilibrium Model

With increasing availability of alternative mobility options for city transportation system, it is necessary to better understand how emerging mobility are impacting the travel demand and consumer-social surplus. However, few study has been conducted to evaluate the social welfare effects of the range of vacant trip in mobility oriented development(MOD) mode. This paper identified the vacant trip and loading rate evaluation model under mobility oriented development mode. recommended solutions to enhance the effective operation of the different mobility services under numerical illustrations, which can offer some beneficial guidance and theoretic basis to the efficiency of MOD in planning and management aspects.

Tullock’s Challenge: A Reconsideration of Constitutional Monarchy

Tullock (2005, p. 160) notes that the perceived robust relationship between democracy and economic progress is due mostly to assumption, rather than analysis. Taking up Tullock’s challenge to consider the relationship bet - ween economic progress and other political forms, we re-assess the relation-ship between monarchy and economic progress. Our analysis specifically focuses on the possibility of a «monarchical» constitution creating the insti-tutions within which, compared to democracy, a larger social surplus can be enjoyed. After summarizing the existing conversation on monarchy vs. democracy, we outline a constitutional political economy of monarchy and apply it to the European country of Liechtenstein, which has enjoyed both rapid development and non-discriminatory governance under the kind of constitution we envision. We conclude by responding to anticipated objec-tions and proposing further avenues of inquiry on the political economy of monarchy. Key words: Constitutional Political Economy, Democracy, Efficiency, Monarchy, Liechtenstein. JEL Classification: H1, H77, P1. Resumen: De acuerdo a Tullock (2005, p. 160) la sólida relación entre demo-cracia y progreso económico descansa más en supuestos que en análisis. Tomando el desafío de Tullock de considerar la relación entre progreso eco-nómico y diversas estructuras políticas, re-evaluamos la relación entre mo-narquía y progreso económico. Nuestro análisis se enfoca específicamente en la posibilidad de una «monarquía» constitucional que crea la instituciones en las cuales, comparado con una democracia, un mayor beneficio social es posible. Luego de resumir la conversación monarquía vs. democracia, pre-sentamos una política económica constitucional de la monarquía y la apli-camos al país europeo de Lichtenstein, que ha presentado un rápido desa-rrollo y una gobernanza no discriminatoria bajo el tipo de constitución que presentamos. Concluimos respondiendo a anticipadas objeciones y pro po - niendo siguientes caminos de investigación en el tema de la economía po-lítica de la monarquía. Palabras clave: Economía Política Constitutional, Democracia, Eficiencia, Monarquía, Liechtenstein. Clasificación JEL: H1, H77, P1.