The topic of this year's annual meeting, "Political Economy", has, at least, two dimensions. The first one is the new discussion of the role of government in a modern democratic market society. As I discussed two years ago at the same occasion, the great financial and economic crisis of the recent years lead us to reconsider this role. The second dimension is to what extent political processes are topics of economic analyses or, to state it somewhat differently, the relation between ‘Economics' (Volkswirtschaftslehre) on the one and ‘Political Economy' (Politische Ökonomie) on the other hand. Both topics are interrelated.
This paper attempts to address the issue of whether or not it would be in the long-term interests of Switzerland to allow parallel imports, particularly medicines, from European Union member countries. The market for pharmaceuticals is state-regulated and new drugs have to be regulated by individual countries through negotiation in order to establish price levels.
After a short description of the economic model of behaviour it is shown that there are two reasons why problems arise if this model is applied to political processes and decisions. First, such decisions are often ‘low cost', i.e. ‘wrong' decisions have hardly any impact on the decision maker. Second, the behaviour of single individuals or small groups of individuals is to be explained. The common root of this problem is the difficulty to predict behaviour which is mainly preference governed and not guided by (changing) restrictions. Nevertheless, this should not lead to abolish the economic model because (i) it can be usefully applied also in this area and (ii) a better alternative is hardly available.
