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

Author

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  • Farasat A.S. Bokhari

    (Centre for Competition Policy and School of Economics, University of East Anglia)

  • Franco Mariuzzo

    (Centre for Competition Policy and School of Economics, University of East Anglia)

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.

Suggested Citation

  • Farasat A.S. Bokhari & Franco Mariuzzo, 2018. "Demand estimation and merger simulations for drugs: Logits v. AIDS," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2016-06v3, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2016_06v3
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    More about this item

    Keywords

    Demand systems; AIDS demand; logit; random coefficients logit; discrete choice; 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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