Umeå Economic Studies, Department of Economics, Umeå University
No 709:
Consumer Information and Pharmaceutical Prices: Theory and Evidence
David Granlund ()
and Niklas Rudholm ()
Abstract: In this paper, the impact of increased consumer
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 23, 2007
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