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Demand estimation and merger simulations for drugs: Logits v. AIDS

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  • Bokhari, Farasat A.S.
  • Mariuzzo, Franco

Abstract

We use ADHD drugs sales data from 2000–2003 and compare estimates of elasticities and merger simulations from three different demand models. Models include logit, random coefficients logit, and conditional AIDS demand model with multistage budgeting. The magnitude of cross-price elasticities is larger in the third model in comparison to the first two, and some of the cross-price elasticities are estimated to be negative. Hypothetical merger simulations show larger price effects for the multistage AIDS model in comparison to the discrete choice models.

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  • Bokhari, Farasat A.S. & Mariuzzo, Franco, 2018. "Demand estimation and merger simulations for drugs: Logits v. AIDS," International Journal of Industrial Organization, Elsevier, vol. 61(C), pages 653-685.
  • Handle: RePEc:eee:indorg:v:61:y:2018:i:c:p:653-685
    DOI: 10.1016/j.ijindorg.2018.01.005
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    More about this item

    Keywords

    Demand systems; AIDS demand; Logit; Random coefficients logit; Merger simulations; Psychostimulant drugs;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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