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Consumer Information and Pharmaceutical Prices: Theory and Evidence *
Author(s) -
Granlund David,
Rudholm Niklas
Publication year - 2011
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/j.1468-0084.2010.00614.x
Subject(s) - economics , brand names , consumer information , advertising , reference price , natural experiment , substitution (logic) , marketing , business , microeconomics , computer science , mathematics , statistics , programming language
The impact of a reform that increased consumer information on brand name and generic pharmaceutical prices is analysed both theoretically and empirically. The theoretical results show that an increase in information likely reduces the price of brand name pharmaceuticals, while the results regarding generics are less clear. In the empirical part of the article, 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. The results clearly show that the reform has lowered the price of both brand name and generic pharmaceuticals.