Credence goods and market power: an econometric study on the Brazilian pharmaceutical industry
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2003-12-01
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Bearing in mind the market failures pointed out by the economic literature and following the international empirical evidence, and based on original micro data of the Brazilian pharmaceutical industry in the late 1990s, this article attempts to relate empirically drug prices in Brazil to some explaining variables. We find that, similarly to previous U.S. estimations, leading branded drugs accommodated share growth of the followers, turning towards a more inelastic market segment and raising their prices. On followers, in turn, a fall of the concentration index in a market had ambiguous effects: if due to reduced leader power, followers raised their relative prices; if due to a tougher competition within the fringe, their relative prices tended to go down.