Diffusion of innovations in social interaction systems. An agent-based model for the introduction of new drugs in markets

Julio Pombo-Romero (), Luis Varela and Carlos Ricoy

The European Journal of Health Economics, 2013, vol. 14, issue 3, 443-455

Abstract: The existence of imitative behavior among consumers is a well-known phenomenon in the field of Economics. This behavior is especially common in markets determined by a high degree of innovation, asymmetric information and/or price-inelastic demand, features that exist in the pharmaceutical market. This paper presents evidence of the existence of imitative behavior among primary care physicians in Galicia (Spain) when choosing treatments for their patients. From this and other evidence, we propose a dynamic model for determining the entry of new drugs into the market. To do this, we introduce the structure of the organization of primary health care centers and the presence of groups of doctors who are specially interrelated, as well as the existence of commercial pressure on doctors. For modeling purposes, physicians are treated as spins connected in an exponentially distributed complex network of the Watts-Strogatz type. The proposed model provides an explanation for the differences observed in the patterns of the introduction of technological innovations in different regions. The main cause of these differences is the different structure of relationships among consumers, where the existence of small groups that show a higher degree of coordination over the average is particularly influential. The evidence presented, together with the proposed model, might be useful for the design of optimal strategies for the introduction of new drugs, as well as for planning policies to manage pharmaceutical expenditure. Copyright Springer-Verlag 2013

Keywords: Technological diffusion; Small world networks; Ising model; Complex economy; Pharmaceutical market; Agent based model; C-31; D-85; I-11; H-75; O-33 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10198-012-0388-5

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