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An Equilibrium Model Estimated on Pharmaceutical Data

Author

Listed:
  • Dag Morten Dalen

    (BI Norwegian School of Management)

  • Marilena Locatelli

    (The Frisch Centre Oslo)

  • Steinar Strøm

    (The Frisch Centre Oslo
    University of Oslo)

Abstract

The purpose of this paper is to estimate patients’ and doctors’ responses to prices when making a choice between brand name products and generics. We account for the response of pharmacies to government regulation and to prices set by brand name producers. The data from the Norwegian Prescription Database are unique in the sense that we observe prices set by pharmacies as well as by producers. Our results confirm that estimating only the demand side yields biased estimates of consumers’ price responses. We find much stronger price responses when demand and supply are jointly estimated.

Suggested Citation

  • Dag Morten Dalen & Marilena Locatelli & Steinar Strøm, 2018. "An Equilibrium Model Estimated on Pharmaceutical Data," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 46(3), pages 281-296, September.
    • Handle: RePEc:kap:atlecj:v:46:y:2018:i:3:d:10.1007_s11293-018-9592-8
    DOI: 10.1007/s11293-018-9592-8
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    References listed on IDEAS

    as
    1. Arcidiacono, Peter & Ellickson, Paul B. & Landry, Peter & Ridley, David B., 2013. "Pharmaceutical followers," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 538-553.
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    4. Skipper, Niels & Vejlin, Rune, 2015. "Determinants of generic vs. brand drug choice: Evidence from population-wide Danish data," Social Science & Medicine, Elsevier, vol. 130(C), pages 204-215.
    5. Granlund, David, 2010. "Price and welfare effects of a pharmaceutical substitution reform," Journal of Health Economics, Elsevier, vol. 29(6), pages 856-865, December.
    6. Dag Morten Dalen & Marilena Locatelli & Enrico Sorisio & Steinar Str?m, 2014. "Does the Identity of the Third-Party Payer Matter for Prescribing Doctors?," Applied Economics and Finance, Redfame publishing, vol. 1(1), pages 39-54, May.
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    9. Judith K. Hellerstein, 1998. "The Importance of the Physician in the Generic Versus Trade-Name Prescription Decision," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 108-136, Spring.
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