| In this dissertation, I analyze empirically two aspects of competition between pioneer drugs and their generic counterparts in post-patent prescription drug markets: the determinants of market share and the relationship between prices and number of competitors. My empirical analysis of market share uses a data set containing information on 82 drug markets for the period covering 1989 to 1993. This study of market share has a number of advantages over previous work. In particular, I model advertising as having long-lived effects and estimate the retention rates associated with advertising. In addition, I formally account for the joint determination of market share, price, and advertising.; The results indicate that pioneer drug advertising accounts for little of the difference between the market shares of pioneer drugs and generic products. Advertising for generic products, however, appears to decrease the pioneer drug's market share. In addition, I find that advertising has long-lived effects; in particular, almost all of the initial effects of journal advertisements carry over into the following year. Finally, I find that price is a significant determinant of market share.; I next test the relationship between pioneer drug prices and the number of genetic drug sellers for one class of drug products, antiinfectives. The findings of a recent study contradict the results of previous works, which have shown little effects of entry on pioneer drug prices. My analysis attempts to reconcile these conflicting findings by empirically estimating the relationship between price and number of competitors using a data set relating to the population of antiiinfective products for 1987 to 1991.; I initially find a significant negative relationship between the number of competitors in a market and the prices of pioneer drugs. However, once I control for the large number of old pioneer drug products in the data and autocorrelation, the relationship between price and number of competitors disappears. The results offer a possible explanation for the different findings reported in studies on the relationship between pioneer drug prices and the number of generic products in a market. |
