This paper analizes the regulation of the retail distribution of medicines in Spain. In the first part, we explain a theoretic model of spatial competition which allows us to analyse to see the effects of different liberalization mesures such as the liberalization of entry and/or prices. Of special interest is the determination of the optimal number of pharmacies from a welfare point of view. In the second part, we analize the number of pharmacies and the margin that is permitted by law in Spain, first comparing the number and margins in other European countries, and taking into account the suggestions made in the model for a correct comparison. Subsequently, we estimate the model from the data available on the number of retail pharmacies operating in the autonomous regions in Spain.

Keywords: pharmacies, regulation, model of spatial competition, liberalization.
JEL classification: K2