Generic entry, price competition, and market segmentation in the prescription drug market

Tracy Regan

No 2010-7, Working Papers from University of Miami, Department of Economics

Abstract: This paper studies the effects of generic entry on post-patent price competition for 18 prescription drugs recently exposed to competition. An independent, validating test of the “generic competition paradox” is conducted using a newly created data set. Each generic entrant is associated with an average 1% increase in the branded price. The one-way error component model accounts for intermolecular competition, market segmentation, and endogeneity of entry and finds branded prices increasing by 2%. Alternative definitions of entry suggest that price competition is confined to the generic market. The unique payer-type feature of the data offers empirical evidence supporting market segmentation.

Keywords: Generic entry; Price competition; Prescription drugs; Market segmentation; One-way error component model; EC2SLS (search for similar items in EconPapers)
JEL-codes: I11 L11 L13 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2007-08
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Published

Downloads: (external link)
https://herbert.miami.edu/_assets/files/repec/wp-2020-7.pdf First version, 2009 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (https://herbert.miami.edu/_assets/files/repec/wp-2020-7.pdf [301 Moved Permanently]--> https://www.herbert.miami.edu/_assets/files/repec/wp-2020-7.pdf)

Related works:
Journal Article: Generic entry, price competition, and market segmentation in the prescription drug market (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mia:wpaper:2010-7

Access Statistics for this paper

More papers in Working Papers from University of Miami, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Daniela Valdivia ().