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An Equilibrium Model Estimated on Pharmaceutical Data

Dalen, Dag Morten; Locatelli, Marilena; Strøm, Steinar Øivind
Journal article, Peer reviewed
Accepted version
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URI
http://hdl.handle.net/11250/2570877
Date
2018
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Original version
Atlantic Economic Journal. 2018, 46 (3), 281-296.   10.1007/s11293-018-9592-8
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.
Publisher
Springer
Journal
Atlantic Economic Journal

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