Price dynamics of Swedish pharmaceuticals

Publication Type

Journal Article

Publication Date

10-2022

Abstract

This paper investigates price patterns of off-patent pharmaceuticals in Sweden. I show that price dynamics are dependent on the number of competitors in the market. The price patterns follow predictions from a model of dynamic price competition in which the demand for pharmaceuticals incorporates the known biases of consumers: habit persistence and brand preferences. Using the regulated market of Swedish pharmaceuticals, I show that price dynamics may help in identifying possible tacit collusion by manufacturers in markets where consumers experience behavioral frictions.

Keywords

Pharmaceutical pricing, Dynamic oligopoly, State dependence, Price cycles

Discipline

Industrial Organization

Research Areas

Applied Microeconomics

Publication

Quantitative Marketing and Economics

Volume

20

First Page

313

Last Page

351

ISSN

1570-7156

Identifier

10.1007/s11129-022-09257-2

Publisher

Springer Verlag (Germany)

Additional URL

https://doi.org/10.1007/s11129-022-09257-2

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