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. In markets with more than three suppliers, the cheapest firm often increases its price in the next month. The price patterns follow predictions from a model of dynamic price competition, where the demand for pharmaceuticals incorporates the known biases of consumers: habit persistence and brand preferences.
Work in Progress:
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)
This paper takes advantage of the mixed member proportional system in the German parliament by employing a regression discontinuity design to quantify the causal effect of a district election on the conformity to the party line. First, we show that the election by a district does not affect the roll call voting behavior of a politician causally. Second, we use informational retrieval methods to analyze parliamentary speeches. We demonstrate that speeches of district elected members of parliament do not differ, in terms of cosines-distance, from those of their party-peers who have been elected through closed party lists. To build a measure of closeness of a speech to a party, we train a classifier on the party manifestos and use it to predict probabilities of a parliamentary speech belonging to a certain manifesto. We use the predicted probability of an MP’s own party manifesto as a measure of closeness of the wording to the party’s manifesto. We show that district elected candidates do not use a wording closer or further away from the party’s manifesto. We can negate that district elected MPs have a faster within party career progression.
Obfuscation and Rational Inattention
(Together with Johannes Kasinger)