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

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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.
Original languageEnglish
Pages (from-to)653-685
Number of pages33
JournalInternational Journal of Industrial Organization
Volume61
Early online date1 Feb 2018
DOIs
Publication statusPublished - Nov 2018

Keywords

  • Demand systems
  • AIDS demand
  • logit
  • random coefficients logit
  • discrete choice
  • merger simulations
  • psychostimulant drugs

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