Demand Estimation and Merger Simulations for Drugs: Logits v. AIDS

31 Pages Posted: 22 Sep 2016 Last revised: 12 Aug 2017

See all articles by Farasat A. S. Bokhari

Farasat A. S. Bokhari

University of East Anglia (UEA) - School of Economic and Social Studies; University of East Anglia (UEA) - Centre for Competition Policy

Franco Mariuzzo

University of East Anglia (UEA) - Centre for Competition Policy

Date Written: July 1, 2017

Abstract

We uses 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 large 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 large price effects for the multistage AIDS model in comparison to the discrete choice models.

Keywords: Demand Systems, AIDS Demand, Logit, Random Coefficients Logit, Discrete Choice, Merger Simulations, Psychostimulant Drugs

JEL Classification: L41, K21, I11

Suggested Citation

Bokhari, Farasat A. S. and Mariuzzo, Franco, Demand Estimation and Merger Simulations for Drugs: Logits v. AIDS (July 1, 2017). Available at SSRN: https://ssrn.com/abstract=2841990 or http://dx.doi.org/10.2139/ssrn.2841990

Farasat A. S. Bokhari (Contact Author)

University of East Anglia (UEA) - School of Economic and Social Studies ( email )

Norwich, Norfolk NR4 7TJ
United Kingdom

University of East Anglia (UEA) - Centre for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

Franco Mariuzzo

University of East Anglia (UEA) - Centre for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

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