Brown Bag seminar | Merger and Advertising in the Pharmaceutical Industry with Gosia Majewska
The seminar speaker is Gosia Majewska, TSE, who will present "Merger and Advertising in the Pharmaceutical Industry".
Abstract
In many industries, market structure determines how firms compete in prices but also using promotional activities. We study how price and advertising strategies change when firms merge in pharmaceutical markets in the US. We show that across all drug markets, mergers indeed increase prices but that advertising spending decreases. Merger simulations not accounting for advertising reductions may thus obtain biased price effects. Considering the merger effects of two large pharmaceutical companies on an antimicrobial drug market, we estimate a structural model of demand and supply and simulate the merger effects. We find that the merger effect on prices is smaller given the advertising reduction. Using some known value of the sensitivity of innovation to profits, we evaluate the welfare effects of such merger, accounting for the induced welfare value of future innovation in the trade-off between short run consumer surplus and long run innovation.
Gosia Majewska is a Phd student in Economics at TSE. Gosia is an Industrial Organization (IO) and health economist, interested mostly in pharmaceuticals. She has been studying how mergers and acquisitions affect firm outcomes in the pharmaceutical industry, in particular innovation and advertising, as well as the effect of innovation incentives on antibiotic development.
More About the Speaker
This seminar takes place at Stockholm School of Economics, Sveavägen 65, in room 348.
Please contact kristen.pendleton@hhs.se if you have questions.
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The EUROPEAN NETWORK FOR TRAINING IN ECONOMIC RESEARCH (ENTER) is a cooperative venture between eight leading European Economics Departments, located in Barcelona (Spain), Brussels (Belgium), London (United Kingdom), Madrid (Spain), Mannheim (Germany), Stockholm (Sweden), Tilburg (the Netherlands) and Toulouse (France).
ENTER exchange seminars offer students the possibility to visit universities in the network to present papers and interact with students and faculty members in the other institutions.