Regulation and competition in the Taiwanese pharmaceutical market under national health insurance.


Journal Article

This article investigates the determinants of the prices of pharmaceuticals and their impact on the demand for prescription drugs in the context of Taiwan's pharmaceutical market where medical providers earn profit directly from prescribing and dispensing drugs. Based on product-level data, we find evidence that the profit-seeking behavior of the medical providers in the prescription drug market transfers the force of competition from the unregulated wholesale market to the regulated retail market and hence market competition still plays an important role in the determination of the regulated price. We also find that the profit-seeking behavior plays a similar role to advertising in that it increases the brand loyalty and hence lowers price elasticity. An important implication of our study is that the institutional features in the pharmaceutical market matter in shaping the nature of pharmaceutical competition and the responsiveness of pharmaceutical consumption with respect to changes in price.

Full Text

Cited Authors

  • Liu, Y-M; Yang, Y-HK; Hsieh, C-R

Published Date

  • May 2012

Published In

Volume / Issue

  • 31 / 3

Start / End Page

  • 471 - 483

PubMed ID

  • 22525716

Pubmed Central ID

  • 22525716

Electronic International Standard Serial Number (EISSN)

  • 1879-1646

International Standard Serial Number (ISSN)

  • 0167-6296

Digital Object Identifier (DOI)

  • 10.1016/j.jhealeco.2012.03.003


  • eng