ABSTRACT
The pharmaceutical industry, especially at the manufacturing level, has been the focus of much academic interest involving several disciplines. Beginning about 1970, economists began to investigate alternative explanations and hypotheses concerning the economics of the pharmaceutical industry. This chapter provides a fairly comprehensive review and interpretation of both the pre- and post-1970 sets of literature on this subject. In addition to the summary of the literature, the chapter provides a basic bibliography for those who want to investigate and interpret the economic literature for themselves. Economists have traditionally emphasized the market model of pure competition as the hallmark for assessing and judging the degree of economic efficiency in the production and consumption of goods and services in a particular marketplace. The availability of a consistent and relatively comprehensive data base has given economists the opportunity to study various aspects of the industry. One of the areas studied most extensively is the effects of regulation.
