Price dynamics of Swedish pharmaceuticals

• Main Author: JANSSEN, Aljoscha
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: Pharmaceutical pricing; Dynamic oligopoly; State dependence; Price cycles; Industrial Organization
• Online Access: https://ink.library.smu.edu.sg/soe_research/2677
• Institution: Singapore Management University

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.