Innovation and market dynamics in the EPO market
AbstractWe have estimated the demand of erythropoietin (EPO) on market data from the Nordic countries. Assuming that prices are set in a Nash-Bertrand game we determine the degree of competition in this Nordic market. We also report the impact of product innovation on welfare, e.g on consumer and producer surplus. The product innovation is the entry of Aranesp in the Nordic market. We find a positive effect related to the introduction of Aranesp in the EPO market. The high increase in consumer surplus however seems not to be accompanied by a great increase in producer surplus, whose growth is slight. Some time after the introduction of the innovation, the surplus growth does not seem to increase, it remains more or less the same (or decreases a bit). An important conclusion in our paper is that although there are few firms competing in the Nordic market for EPO, the estimated long run market power is low.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 12/2006.
Length: 32 pages
Date of creation: 09 Jun 2006
Date of revision:
Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
More information through EDIRC
Discrete choice; demand for pharmaceuticals; monopolistic competition; EPO;
Other versions of this item:
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-21 (All new papers)
- NEP-COM-2006-07-21 (Industrial Competition)
- NEP-DCM-2006-07-21 (Discrete Choice Models)
- NEP-MIC-2006-07-21 (Microeconomics)
- NEP-MKT-2006-07-21 (Marketing)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- DiMasi, Joseph A. & Hansen, Ronald W. & Grabowski, Henry G., 2003. "The price of innovation: new estimates of drug development costs," Journal of Health Economics, Elsevier, vol. 22(2), pages 151-185, March.
- Ernst R. Berndt & Robert S. Pindyck & Pierre Azoulay, 2003.
"Consumption Externalities and Diffusion in Pharmaceutical Markets: Antiulcer Drugs,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 51(2), pages 243-270, 06.
- Ernst R. Berndt & Robert S. Pindyck & Pierre Azoulay, 2000. "Consumption Externalities and Diffusion in Pharmaceutical Markets: Antiulcer Drugs," NBER Working Papers 7772, National Bureau of Economic Research, Inc.
- Patricia M. Danzon & Andrew Epstein & Sean Nicholson, 2004.
"Mergers and Acquisitions in the Pharmaceutical and Biotech Industries,"
NBER Working Papers
10536, National Bureau of Economic Research, Inc.
- Patricia M. Danzon & Andrew Epstein & Sean Nicholson, 2007. "Mergers and acquisitions in the pharmaceutical and biotech industries," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 307-328.
- Franco Malerba & Luigi Orsenigo, 2002. "Innovation and market structure in the dynamics of the pharmaceutical industry and biotechnology: towards a history-friendly model," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 667-703, August.
- Scott Stern & Manuel Trajtenberg, 1998.
"Empirical Implications of Physician Authority in Pharmaceutical Decisionmaking,"
NBER Working Papers
6851, National Bureau of Economic Research, Inc.
- Stern, S. & Trajtenberg, M., 1998. "Empirical Implications of Physician Authority in Pharmaceutical Decisionmaking," Papers 24-98, Tel Aviv.
- Paul Ellickson & Scott Stern & Manuel Trajtenberg, 2001.
"Patient Welfare and Patient Compliance -- An Empirical Framework for Measuring the Benefits from Pharmaceutical Innovation,"
in: Medical Care Output and Productivity, pages 539-564
National Bureau of Economic Research, Inc.
- Paul Ellickson & Scott Stern & Manuel Trajtenberg, 1999. "Patient Welfare and Patient Compliance: An Empirical Framework for Measuring the Benefits from Pharmaceutical Innovation," NBER Working Papers 6890, National Bureau of Economic Research, Inc.
- Kenneth Train, 2003.
"Discrete Choice Methods with Simulation,"
Online economics textbooks,
SUNY-Oswego, Department of Economics, number emetr2, Spring.
- DiMasi, Joseph A. & Hansen, Ronald W. & Grabowski, Henry G. & Lasagna, Louis, 1991. "Cost of innovation in the pharmaceutical industry," Journal of Health Economics, Elsevier, vol. 10(2), pages 107-142, July.
- Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
- Patricia M. Danzon & Sean Nicholson & Nuno Sousa Pereira, 2003.
"Productivity in Pharmaceutical Biotechnology R&D: The Role of Experience and Alliances,"
NBER Working Papers
9615, National Bureau of Economic Research, Inc.
- Danzon, Patricia M. & Nicholson, Sean & Pereira, Nuno Sousa, 2005. "Productivity in pharmaceutical-biotechnology R&D: the role of experience and alliances," Journal of Health Economics, Elsevier, vol. 24(2), pages 317-339, March.
- Amrita Bhattacharyya, 2005. "Advertising in Specialized Markets: Example from the US Pharmaceutical Industry," Boston College Working Papers in Economics 610, Boston College Department of Economics, revised 10 Nov 2005.
- Cockburn, Iain M. & Henderson, Rebecca M., 2001. "Scale and scope in drug development: unpacking the advantages of size in pharmaceutical research," Journal of Health Economics, Elsevier, vol. 20(6), pages 1033-1057, November.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rhiana Bergh-Seeley).
If references are entirely missing, you can add them using this form.