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Working Paper 16-6 v3 [updated January 2018]

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

AUTHORS: Farasat A.S. Bokhari & Franco Mariuzzo

ABSTRACT: We used 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

CITATION: Bokhari, F.A.S & Mariuzzo, F (2016) "Demand estimation and merger simulations for drugs: logit v. aids", CCP Working Paper 16-6 v2

 Policy Brief 16-6


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