nep-hea New Economics Papers
on Health Economics
Issue of 2005‒03‒06
four papers chosen by
Yong Yin
SUNY at Buffalo, USA

  1. Advertising in Specialized Markets: Example from the US Pharmaceutical Industry By Amrita Bhattacharyya
  2. Birth spacing and neonatal mortality in India: dynamics, frailty and fecundity By Bahiotra,Sonia; Soest,Arthur van
  3. Can We Trust Private Firms as Suppliers of Vaccine for the Avian Influenza? By Forslid, Rikard
  4. The Labor Market Effects of Rising Health Insurance Premiums By Katherine Baicker; Amitabh Chandra

  1. By: Amrita Bhattacharyya (Boston College)
    Abstract: Pharmaceutical companies spend billions of dollars on advertising prescription drugs to doctors and also to consumers directly. People wonder why is direct-to-consumer-advertising (DTCA) concentrated among only a few classes of drugs, what explains the within-class variation of DTCA, how are DTCA and physician advertising related. We analyze the advertising equilibriums in prescription drugs market and find that it is possible to have a sub-game perfect non-symmetric Nash-equilibrium when, (i)the number of patients who are aware of a treatment is very low, and (ii) there are very few people who insist on having a particular drug. Otherwise, for very familiar diseases a non-advertising equilibrium is most likely. We also find that, all competing brands in a class are likely to advertise to consumers if the number of insisting patients is very high. Finally, advertising to consumers does not substitute for advertising directed to physicians.
    Keywords: advertising, DTCA, prescription, expert, Nash equilibrium
    JEL: L0 M3 I0
    Date: 2005–02–28
  2. By: Bahiotra,Sonia; Soest,Arthur van (Tilburg University, Center for Economic Research)
    Abstract: A dynamic panel data model of neonatal mortality and birth spacing is analyzed, accounting for causal effects of birth spacing on subsequent mortality and of mortality on the next birth interval, while controlling for unobserved heterogeneity in mortality (frailty) and birth spacing (fecundity). The model is estimated using micro data on about 29000 children of 6700 Indian mothers, for whom a complete retrospective record of fertility and child mortality is available. Information on sterilization is used to identify an equation for completion of family formation that is needed to account for right-censoring in the data. We find clear evidence of frailty, fecundity, and causal effects of birth spacing on mortality and vice versa, but find that birth interval effects can explain only a limited share of the correlation between neonatal mortality of successive children in a family.
    JEL: J12 J13 C33
    Date: 2005
  3. By: Forslid, Rikard (Dept. of Economics, Stockholm University)
    Abstract: Using a simple monopoly model, this note analyses the incentives of a vaccine producer. Because a vaccine tends to eradicate the disease for wich it is intended, it also tends to destroy its own market. This means that monopolistic producers may be tempted, in a socially non-optimal way, to delay the introduction of vaccines against new infections until the disease has spread.
    Keywords: Vaccines
    JEL: D42 D62 H10 I18 L10
    Date: 2005–02–22
  4. By: Katherine Baicker; Amitabh Chandra
    Abstract: Since 2000, premiums for employer-provided health insurance have increased by 59 percent with little corresponding increase in the generosity of coverage. The effect of this increase in costs on wages and employment will depend on workers' valuation of the benefit, the elasticities of labor supply and demand, and institutional constraints on employers' ability to lower wages. Measuring these effects is difficult, however, without a source of exogenous variation in the cost of benefits. We use variation in medical malpractice payments driven by the recent "medical malpractice crisis" to identify the causal effect of rising health insurance premiums on wages, employment, and health insurance coverage. We estimate that a 10 percent increase in health insurance premiums reduces the aggregate probability of being employed by 1.6 percent and hours worked by 1 percent, and increases the likelihood that a worker is employed only part-time by 1.9 percent. For workers covered by employer provided health insurance, this increase in premiums results in an offsetting decrease in wages of 2.3 percent. Thus, rising health insurance premiums may both increase the ranks of the unemployed and place an increasing burden on workers through decreased wages for workers with employer health insurance and decreased hours for workers moved from full time jobs with benefits to part time jobs without.
    JEL: I1 J0 J3
    Date: 2005–02

This nep-hea issue is ©2005 by Yong Yin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.