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Defining relevant markets for pharmacuticals
Dalarna University, School of Technology and Business Studies, Human Geography. HUI Research.ORCID iD: 0000-0003-3362-5755
Dalarna University, School of Technology and Business Studies, Economics.
2017 (English)In: Bulletin of Economic Research, ISSN 0307-3378, E-ISSN 1467-8586, Vol. 69, no 4, p. E126-E149Article in journal (Refereed) Published
Abstract [en]

To identify the relevant product markets for Swedish pharmaceuticals, a spatial econometrics approach is employed. First, we calculate Moran’s Is for different market definitions and then we use a spatial Durbin model to determine the effect of price changes on quantity sold of own and competing products. As expected, the results show that competition is strongest between close substitutes; however, the relevant product markets for Swedish pharmaceuticals extend beyond close substitutes down to products included in the same class on the four-digit level of the Anatomic Therapeutic Chemical system as defined by the World Health Organization. The spatial regression model further indicates that increases in the price of a product significantly lower quantity sold of that product and in the same time increase the quantity sold of competing products. For close substitutes (products belonging to the same class on the seven-digit level of the Anatomic Therapeutic Chemical system), as well as for products that, without being close substitutes, belong to the same therapeutic/pharmacological/chemical subgroup (the same class on the five-digit level of the Anatomic Therapeutic Chemical system), increased competition is also visible after 1 July 2009 when the latest policy changes with regards to pharmaceuticals have been implemented in Sweden.

Place, publisher, year, edition, pages
2017. Vol. 69, no 4, p. E126-E149
Keywords [en]
competition; horizontal merger guidelines; market delineation; market reform; spatial Durbin model
National Category
Economics
Research subject
Complex Systems – Microdata Analysis, General Microdata Analysis - retail
Identifiers
URN: urn:nbn:se:du-23605DOI: 10.1111/boer.12106ISI: 000412524800008OAI: oai:DiVA.org:du-23605DiVA, id: diva2:1057330
Available from: 2016-12-17 Created: 2016-12-17 Last updated: 2017-10-27Bibliographically approved

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Mihaescu, OanaRudholm, Niklas

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CiteExportLink to record
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Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • chicago-author-date
  • chicago-note-bibliography
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf