1. The economics of profit-cap policy: Big Pharma, Big Tech, and the duopoly rule.
- Author
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Basu, Kaushik, Pitsuwan, Fikri, and Zhang, Pengfei
- Subjects
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HIGH technology industries , *PHARMACEUTICAL industry , *PROFITEERING , *COVID-19 vaccines - Abstract
A known policy dilemma occurs between the need to curb extra-large profits by some industries, like pharmaceuticals, and the need to ensure the incentive to produce is not damaged. This paper shows that a profit cap, imposed via taxation on a group of firms, can simultaneously eliminate inefficiency and excess profit by intensifying competition among oligopolistic firms. The result has a direct bearing on policy debates on COVID-19 vaccine sharing and the use of vaccine donation as a "humanitarian obligation," and, more generally, on the regulatory institutions needed for industries that rely on R&D. [ABSTRACT FROM AUTHOR]
- Published
- 2023
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