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http://dx.doi.org/10.5762/KAIS.2018.19.5.389

The economic effect of Korea-EFTA Mutual Recognition Agreement in the pharmaceutical industry using Conditional Valuation Method (CVM)  

Kwon, Tae-Hyuk (Korea Health Industry Development Institute(KHIDI))
Lee, Sang-Won (School of Pharmacy, Sungkyunkwan University)
Publication Information
Journal of the Korea Academia-Industrial cooperation Society / v.19, no.5, 2018 , pp. 389-398 More about this Journal
Abstract
An MRA is considered to be an important policy tool within the WTO for overcoming technical barriers to trade. A number of studies on the economic impact of MRAs have demonstrated their positive economic effects. However, no studies have been conducted on MRAs in the pharmaceutical industry since analysis has been limited to industries as a whole or certain industries where some data were accumulated. Therefore, this paper analyzed the economic impact of MRAs for GMP inspection exemption in the pharmaceutical industry through the Conditional Valuation Method (CVM), a valuation technique for non-market goods. Pharmaceutical companies were asked whether or not they were willing to pay for the Korea-EFTA MRA through double-bounded dichotomous choice (DBDC) questions. The final WTP was estimated using the utility difference model developed by Hanemann (1984). As a result, annual economic effects on the pharmaceutical industry were estimated to be between KRW7.03 billion to KRW15.8 billion.
Keywords
Conditional Valuation Method(CVM); MRA; EFTA; Pharmaceutical Industry; Exemption from GMP inspection;
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