Demand estimation and merger simulations for drugs: Logits v. AIDS

Farasat Bokhari and Franco Mariuzzo

International Journal of Industrial Organization, 2018, vol. 61, issue C, 653-685

Abstract: We use ADHD drugs sales data from 2000–2003 and compare estimates of elasticities and merger simulations from three different demand models. Models include logit, random coefficients logit, and conditional AIDS demand model with multistage budgeting. The magnitude of cross-price elasticities is larger in the third model in comparison to the first two, and some of the cross-price elasticities are estimated to be negative. Hypothetical merger simulations show larger price effects for the multistage AIDS model in comparison to the discrete choice models.

Keywords: Demand systems; AIDS demand; Logit; Random coefficients logit; Merger simulations; Psychostimulant drugs (search for similar items in EconPapers)
JEL-codes: I11 K21 L41 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:61:y:2018:i:c:p:653-685

DOI: 10.1016/j.ijindorg.2018.01.005

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