Work in Progress:
Price Dynamics of Swedish Pharmaceuticals
This paper investigates price patterns of off-patent pharmaceuticals in Sweden. I show that price dynamics are dependent on the number of competitors. For example, manufacturers who are the only supplier of a substance do not vary their prices. In oligopolies with two or three suppliers, firms occasionally rotate their prices in a symmetrical fashion such that a product is cheaper one month and more expensive the next month. In other duopolistic markets, firms set identical prices. In markets with more than three suppliers, the cheapest firm often increases its price in the next month such that patients seldom the same product is the cheapest over two consecutive months. The price patterns follow predictions from a dynamic price competition between firms, where the demand for pharmaceuticals incorporates the known biases of consumers. First, patients are habit persistent and prefer to stick to one pharmaceutical. Second, consumers favor original brand products. I characterize Markov perfect equilibria that accurately explain noticeable price patterns. Moreover, I show first-best collusion schemes that are in line with observations of symmetric price cycles.
Switching Costs, Quality Misconceptions and Behavioral Pricing in the Pharmaceutical Market
Do District Elected Members of the Parliament favor their District or their Party? A Textual Analysis of Parliamentary Speeches using Machine Learning.
(Together with Andreas Born)
Obfuscation and Rational Inattention
(Together with Johannes Kasinger)