Scandinavian Working Papers in Economics

HERO On line Working Paper Series,
Oslo University, Health Economics Research Programme

No 2006:3: Innovation and market dynamics in the EPO market

Enrico Sorisio and Steinar Strøm ()
Additional contact information
Enrico Sorisio: PharmaNess scarl; University of Turin, Postal: Italy
Steinar Strøm: University of Oslo; The Frisch Centre, Oslo; University of Turin, Postal: Department of Economics, University of Oslo, P.O. Box 1095, Blindern, O317 Oslo, Norway.

Abstract: In this paper we study the demand and supply of erythropoietin in four Nordic countries, using an econometric model based on discrete choice and a random utility model. It measures the effect of price changes as well as the loyalty of patients and physicians to a drug. Our main aims are to estimate demand for EPO and to determine the degree of competition in this Nordic market. The main motivation for this paper is to analyze the impact of product innovation on market power and welfare, e.g. on consumer and producer surplus. The product innovation is the entry of Aranesp in the Nordic market.

Keywords: Discrete choice; demand for pharmaceuticals; monopolistic competition; EPO

JEL-codes: C35; D43; I18; L11

31 pages, June 4, 2009

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