Freedom, Markets, and Well-being Fall 2021



Professor Brown walked us through the way prices are set when there are natural monopolies.

Having thought about it for, oh, two minutes, it seems to me that pharmaceuticals are a great case for price discrimination. You can only sell a drug where it is licensed. So long as consumers in the US are prohibited from buying drugs licensed for sale in India, say, a monopoly can charge consumers in the US higher prices and consumers in India lower prices. This matters because the sub-optimal result described in Prof. Brown’s graph comes about assuming there can only be one price.

Both of the main readings said that the way to make enough vaccine for the world, at affordable prices, would be to suspend patent rights. I’m less sure. The authors of the New York Times editorial claim that Moderna’s offer not to enforce its patents is not good enough because “other types of intellectual property, such as know-how or trade secrets, typically are needed to develop and produce vaccines.” I think that means that it is difficult to make the vaccines even if you know their chemical composition. If so, how will suspending intellectual property rights help? You can’t make the companies help you to produce the vaccines.

At the end of class, I read a few recommendations from a World Bank paper. Here is the citation.

Murthi, Mamta; Reed, Tristan. 2021. Policy Actions to Increase the Supply of COVID-19 Vaccines in the Short Term. Research and Policy Brief; No. 49. World Bank, Malaysia.