Scandinavian Working Papers in Economics
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No 8:
Consumer Information and Pharmaceutical Prices: Theory and Evidence

David Granlund () and Niklas Rudholm ()

Abstract: 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.

Keywords: Pharmaceutical industry; generic competition; generic drugs; brand name drugs; (follow links to similar papers)

JEL-Codes: D80; D83; I11; L65; (follow links to similar papers)

32 pages, April 1, 2007

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This paper is published as:
Granlund, David and Niklas Rudholm, (2011), 'Consumer Information and Pharmaceutical Prices: Theory and Evidence', Oxford Bulletin of Economics and Statistics, Vol. 73, No. 2, pages 230-254

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