MARKET ORGANIZATION AND PRICING BEHAVIOUR OF OLIGOPOLISTIC FIRMS IN THE ETHICAL DRUGS INDUSTRY : AN ESSAY IN THE MEASUREMENT OF EFFECTIVE COMPETITION

다국어 초록 (Multilingual Abstract)

The hypothesis that doctors prescribe drugs without taking price into consideration is tested empirically and refuted. Price elasticities of competing drugs are derived from single-equation estimates and from estimates of systems of supply and demand functions. Price differences on a stagnant market, though fairly stable over time, lead to significant changes in market shares. Cross price elasticities rise. On an expanding market, however, cross price elasticities tend to decline with market entries of new prescriptions pushing them up again. the conclusion to be drawn from the empirical analysis is that price differentials are not so much due to price ignorance on the side of doctors but rather due to price consciousness in the face of heterogeneous products on polypolistic drug markets.