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An empirical model of learning and patient spillovers in new drug entry

Coscelli, Andrea and Shum, Matthew (2004) An empirical model of learning and patient spillovers in new drug entry. Journal of Econometrics, 122 (2). pp. 213-246. ISSN 0304-4076.

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We specify and estimate a diffusion model for the new molecule omeprazole into the anti-ulcer drug market. Our model is based on a Bayesian learning process whereby doctors update their beliefs about omeprazole’s quality relative to existing drugs after observing its effects on the patients that have been prescribed this drug. The model also accommodates informational spillovers and heterogeneity in informativeness across patients with different diagnoses. We obtain estimates of the learning process parameters using a novel panel data set tracking doctors’ complete prescription histories over a 3-year period.

Item Type:Article
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URLURL TypeDescription
Shum, Matthew0000-0002-6262-915X
Additional Information:© 2003 Elsevier. Accepted 3 September 2003. We thank Dr. Giuseppe Traversa and Roberto Da Cas at the Istituto Superiore di Sanita’ and IMS Italy for providing the data, and Tim Bresnahan, Costas Meghir, Fiona Scott Morton, Peter Reiss, and Frank Wolak for their suggestions. We acknowledge financial support from a European Commission TMR fellowship #ERBFMBICT972232 (Coscelli) and a Sloan Foundation dissertation fellowship (Shum). We are grateful to an associate editor and two anonymous referees for detailed comments on earlier drafts.
Funding AgencyGrant Number
European CommissionERBFMBICT972232
Alfred P. Sloan FoundationUNSPECIFIED
Subject Keywords:Entry of innovative drugs; Barriers to entry; Structural diffusion models
Record Number:CaltechAUTHORS:COSje04
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:12240
Deposited By: Lindsay Cleary
Deposited On:31 Oct 2008 17:19
Last Modified:11 Sep 2017 22:47

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