Entry and price competition in the over-the-counter drug market after deregulation: Evidence from Portugal.

ABSTRACT: In the last two decades, many European countries allowed the sale of over-the-counter (OTC) drugs outside pharmacies. This was expected to lower retail prices through increased competition. Evidence of such price reductions is scarce. We assess the impact of supermarket and outlet entry in the OTC drug market on OTC prices charged by incumbent pharmacies using a difference-in-differences strategy. We use price data on five popular OTC drugs for all retailers located in Lisbon for three distinct points in time (2006, 2010, and 2015). Our results suggest that competitive pressure in the market is mainly exerted by supermarkets, which charge, on average, 20% lower prices than pharmacies. The entry of a supermarket among the main competitors of an incumbent pharmacy is associated with an avera

SUBMITTER: Moura A 

PROVIDER: S-EPMC7384133 | biostudies-literature | 2020 Aug

REPOSITORIES: biostudies-literature