INNOVATION AND THE NORDIC ERYTHROPOIETIN MARKET
Link to article:
Authors:
Sorisio, Enrico and Steinar Strøm
Year:
2008
Reference:
Rivista Internazionale di Scienze Sociali, n. 1, 99-126Summary
We have estimated the demand for erythropoietin (EPO) using market data from the Scandinavian countries. Assuming that prices are set in a Nash-Bertrand game we determine the degree of competition in this Scandinavian market. We also report on the impact of product innovation on welfare, e.g on consumer (buyer) and producer surplus. The product innovation is the entry of Aranesp onto the Scandinavian market. We find a positive effect in the EPO market related to the introduction of Aranesp. However, the notable increase in expected consumer surplus does not seem to be accompanied by a corresponding increase in expected producer surplus. Some time after the introduction of the innovation, the total surplus does not seem to increase, remaining more or less constant. An important conclusion is that although there are few firms competing in the Scandinavian EPO market , the estimated long-run market power is rather low.
JEL:
C35, D43, I18, L11
Keywords:
Discrete choice, demand for pharmaceuticals, monopolistic competition, erythropoietin, EPO
Project:
Oppdragsgiver: Norges forskningsrådOppdragsgivers prosjektnr.:
Frisch prosjekt: 4111 - Government financing of drug consumption in Norway and the markets for pharmaceuticals