Consumer Information and Pharmaceutical Prices: Theory and Evidence
In this paper, the impact of increased information on brand name and generic pharmaceutical prices is analyzed both theoretically and empirically. The theoretical results show that an increase in information is likely to reduce the price of brand name pharmaceuticals, while the results regarding generics are less clear. In the empirical part of the paper, the introduction of the substitution reform in the Swedish pharmaceuticals market in October 2002 is used as a natural experiment regarding the effects of increased consumer information on pharmaceutical prices. The results clearly show that the reform has lowered the price of both brand name- and generic pharmaceuticals.
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|Date of creation:||01 Apr 2007|
|Date of revision:|
|Publication status:||Published as Granlund, David and Niklas Rudholm, 'Consumer Information and Pharmaceutical Prices: Theory and Evidence' in Oxford Bulletin of Economics and Statistics, 2011, pages 230-254.|
|Contact details of provider:|| Postal: HUI Research, Regeringsgatan 60, 103 29 Stockholm, Sweden|
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- Mats A. Bergman & Niklas Rudholm, 2003. "The Relative Importance of Actual and Potential Competition: Empirical Evidence From the Pharmaceuticals Market," Journal of Industrial Economics, Wiley Blackwell, vol. 51(4), pages 455-467, December.
- Alan T. Sorensen, 2000. "Equilibrium Price Dispersion in Retail Markets for Prescription Drugs," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 833-862, August.
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