Will Price-Cut Help Greece To Overcome From Its Fiscal Crisis? Barron’s

Very often, governments use price fixing as a tool to overcome their bankruptcy problems. The Greek govt. took a similar step when it announced a cut to the prices it pays pharmaceutical companies. This may lead to similar actions by other European nations in the neighborhood, according to Barron’s. Going by experience, drug companies are not too worried about such actions. Though some drug companies showed resistance, they finally fell in line after negotiations. According to basic economic theory, any price fixing by the Greek govt. will do more harm than help. Greece is one among the six European nations which failed to keep its debt below the prescribed level. And this time other rich European nations may not come up to help Greece.