Substitution Policy and Generic Competition

Laura Birg

No 241, University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: I model the market for an active ingredient (with a brand-name drug and n differentiated generic versions) to study the effect of a substitution rule on prices and the extensive and intensive margin of generic competition. Both substitution rules with physician and patient veto decrease the brand-name price and shift market shares from the brand-name drug to the generics. A substitution rule with physician (patient) veto increases (decreases) generic prices and increases (decreases) the number of generic firms.

Keywords: substitution rule; generic competition (search for similar items in EconPapers)
JEL-codes: I11 I18 L50 (search for similar items in EconPapers)
Date: 2019, Revised 2019
New Economics Papers: this item is included in nep-com, nep-ind and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cegedp:241

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