Industrial Organization Study on Spillovers Between Pharmaceutical Markets

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dc.contributor Aalto-yliopisto fi
dc.contributor Aalto University en
dc.contributor.advisor Liski, Matti, Prof., Aalto University, Finland
dc.contributor.advisor Toivanen, Otto, Prof., Aalto University, Finland
dc.contributor.advisor Ilmakunnas, Pekka, Prof. Emeritus, Aalto University, Finland Siikanen, Markku 2019-08-06T09:01:16Z 2019-08-06T09:01:16Z 2019
dc.identifier.isbn 978-952-60-8642-2 (electronic)
dc.identifier.isbn 978-952-60-8641-5 (printed)
dc.identifier.issn 1799-4942 (electronic)
dc.identifier.issn 1799-4934 (printed)
dc.identifier.issn 1799-4934 (ISSN-L)
dc.description The PDF file includes only Introduction (pages i-12) of the whole dissertation (222 pages). en
dc.description.abstract This thesis is a study in the field of applied industrial organization. The unifying theme of the study are the spillovers between hospital and retail pharmaceutical markets in Finland. This dissertation consists of five chapters where the first chapter serves as the thesis introduction. The second thesis chapter introduces the Finnish pharmaceutical market. The chapter highlights the institutional arrangements which foster connections between the two pharmaceutical markets and explains the regulation relevant to the analysis presented in this thesis. The third chapter develops a simple theoretical model which describes the equilibrium relationships between the two pharmaceutical markets. The theoretical model provides testable implications for Chapters 4 and 5. The fourth thesis chapter investigates the existence of demand spillovers between the two pharmaceutical markets. I examine how pharmaceutical use in the public sector hospitals influences pharmaceutical sales in the retail market. Hospitals use public procurement to obtain pharmaceuticals to the hospital pharmaceutical selection. My research design exploits procurement-induced changes in the hospital selection. I find that retail market sales increase by 2%-47% due to winning the hospital procurement. I also find that reimbursement status and procurement discounts are positively associated with the demand spillover size. For the procurement losers, the effect is mostly negative and ranges from -16% to 2%. A conservative interpretation is that these results represent the upper bound of the actual treatment effect. The fifth thesis chapter investigates the existence of pricing spillovers between the two markets. I investigate how changes in the price paid by the retail market pharmacies are transmitted to the prices offered in the hospital procurements. The retail market price regulation tries to keep the wholesale prices as low as possible but at the same time the regulator does not take into account the fact that the wholesale prices are used as the reservation price in the hospital procurements. I examine the effect of reference price regulation on pricing in both markets. I find that exogenous changes in the wholesale prices paid by the retail market pharmacies are fully transmitted to the bids hospitals receive. The resulting cross-market price elasticity between the hospital bids and the retail market wholesale price varies between 1.15-1.3, implying that the impact of price regulation reaches more widely than just to the retail market. These results demonstrate the need for incorporating the hospital market into the analysis of the pharmaceutical reforms. en
dc.format.extent 222
dc.format.mimetype application/pdf en
dc.language.iso en en
dc.publisher Aalto University en
dc.publisher Aalto-yliopisto fi
dc.relation.ispartofseries Aalto University publication series DOCTORAL DISSERTATIONS en
dc.relation.ispartofseries 131/2019
dc.subject.other Economics en
dc.subject.other Organisations, Corporations en
dc.title Industrial Organization Study on Spillovers Between Pharmaceutical Markets en
dc.type G4 Monografiaväitöskirja fi Kauppakorkeakoulu fi School of Business en
dc.contributor.department Taloustieteen laitos fi
dc.contributor.department Department of Economics en
dc.subject.keyword industrial organization en
dc.subject.keyword health economics en
dc.subject.keyword pharmaceutical markets en
dc.subject.keyword public procurement en
dc.subject.keyword spillovers en
dc.subject.keyword policy evaluation en
dc.subject.keyword reference price regulation en
dc.identifier.urn URN:ISBN:978-952-60-8642-2
dc.type.dcmitype text en
dc.type.ontasot Doctoral dissertation (monograph) en
dc.type.ontasot Väitöskirja (monografia) fi
dc.contributor.supervisor Liski, Matti, Prof., Aalto University, Department of Economics, Finland
dc.opn Rønde, Thomas, Prof., Copenhagen Business School, Denmark
dc.rev Santavirta, Torsten, Assoc. Prof., Uppsala University, Sweden
dc.rev Rønde, Thomas, Prof., Copenhagen Business School, Denmark

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