| This dissertation examines Argentinean pharmaceutical markets during 1988–1995. It constitutes the first analysis of Argentina's markets at the therapeutic class level, and uses an original database collected from existing sources. This data source substantially improves upon previous literature, particularly by including a very large number of therapeutic classes, cleaner market definition, and variables that measure therapeutic equivalence, the degree of necessity, and the chronicity of illnesses treated by each therapeutic class. The thesis contains three analyses.;First, the dissertation studies pharmaceutical market leaders' price responses to the entry of products, contrasting the Argentinean case—with no product patent protection—with findings from the US, where patents are enforced. For the 88 therapeutic classes studied, 56 kept the same leader during the sample period. Results confirm the findings from the US, namely that leaders tend to raise, rather than lower, prices following new entry. A new result is the observation of price-setting differences between main and secondary followers.;Second, the dissertation analyzes determinants of entry in the Argentinean pharmaceutical markets by comparing two alternative entry strategies: brand proliferation and reallocation of brands (i.e., repositioning by simultaneous entry and exit of a single firm in a given therapeutic class). The results for Argentina results support strategic reallocation: firm entry-strategies and market outcomes in equilibrium more nearly reflect vertical rather than horizontal product differentiation.;Third, the dissertation examines market shares and price behavior for four classes of drugs, using a discrete-choice model of product differentiation, where physician prescription and consumer choice of pharmaceutical products are based on tradeoffs between prices, therapeutic factors and marketing/reputation-builder variables.;In addition, results confirm that withdrawal of old products and entry of new ones at higher prices was a typical strategy followed by firms to elude price controls. The findings also support the hypothesis that domestic firm ownership is associated with higher prices. However, such behavior is confirmed only in cases where domestic firms play as followers, especially among the largest three followers. |
