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DTSTART:20190331T010000
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DTSTART:20191027T010000
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DTSTART;TZID=Europe/Helsinki:20190205T121500
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SUMMARY:Aljoscha JANSSEN (Stockholm School of Economics) - "Switching Costs\, Quality Misconceptions and Behavioral Pricing in the Pharmaceutical Market" Polytechnique Recruitment
DESCRIPTION:Time: 12:15 pm – 1:30 pmDate: February 5 \, 2019Place: Room 3001\nAljoscha JANSSEN (Stockholm School of Economics) – “Switching Costs\, Quality Misconceptions and Behavioral Pricing in the Pharmaceutical Market” Polytechnique Recruitment\nAbstract:\nThis article examines the market power of branded prescription drugs faced with generic competition. Using prescription-level and matched socioeconomic panel data of the entire Swedish population between 2010 and 2016\, I provide evidence for the key role of switching costs. A discontinuity surrounding patent expirations establishes that the effect is causal. Further\, by comparing medical experts to non-experts\, I show that non-experts experience considerable quality misconceptions. A unique feature of the Swedish market allows me to rule out patients’ inattention due to information costs as a source of market power. Therefore\, switching costs and quality misconceptions are the key determinants of market power. I then estimate a dynamic oligopoly model with forward-looking firms which is used in counterfactual studies of the effect of switching costs and quality misconceptions on prices. First\, an increase in the length of procurement mimics a reduction of switching costs. In this scenario prices increase by 6.6%. While the effect of switching costs on prices in theory is ambiguous\, moderate switching costs and sufficient competition for new patients increase competitive pressure. Second\, if everyone acts as a medical expert and experiences fewer misconceptions\, prices would fall by 11.9%. \n
URL:https://crest.science/event/aljoscha-janssen-stockholm-school-of-economics-switching-costs-quality-misconceptions-and-behavioral-pricing-in-the-pharmaceutical-market-polytechnique-recruitment/
LOCATION:3001
CATEGORIES:Economics
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