Innovation and the Nordic Erythropoietin Market
AbstractWe have estimated the demand for erythropoietin (EPO) using market data from the Scandinavian countries. Assuming that prices are set in a Nash-Bertrand game we determine the degree of competition in this Scandinavian market. We also report on the impact of product innovation on welfare, e.g on consumer (buyer) and producer surplus. The product innovation is the entry of Aranesp onto the Scandinavian market. We find a positive effect in the EPO market related to the introduction of Aranesp. However, the notable increase in expected consumer surplus does not seem to be accompanied by a corresponding increase in expected producer surplus. Some time after the introduction of the innovation, the total surplus does not seem to increase, remaining more or less constant. An important conclusion is that although there are few firms competing in the Scandinavian EPO market, the estimated long-run market power is rather low.
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Bibliographic InfoArticle provided by Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore in its journal Rivista Internazionale di Scienze Sociali.
Volume (Year): 116 (2008)
Issue (Month): 1 ()
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discrete choice; demand for pharmaceuticals; monopolistic competition; crythropoiethin; EPO;
Find related papers by JEL classification:
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
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- Dalen, Dag Morten & Sorisio, Enrico & Strøm, Steinar, 2009.
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- Dag Morten Dalen & Enrico Sorisio & Steinar Strøm, 2010. "Choosing among Competing Blockbusters: Does the Identity of the Third-Party Payer Matter for Prescribing Doctors?," CESifo Working Paper Series 3227, CESifo Group Munich.
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