Innovation and the Nordic Erythropoietin Market

Enrico Sorisio and Steinar Strøm ()
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Enrico Sorisio: PharmaNess scarl, Center of Technology, Innovation and Culture (TIK), University of Oslo

Rivista Internazionale di Scienze Sociali, 2008, vol. 116, issue 1, 99-126

Abstract: 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.

Keywords: discrete choice; demand for pharmaceuticals; monopolistic competition; crythropoiethin; EPO (search for similar items in EconPapers)
JEL-codes: C35 D43 I18 L11 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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