Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Preliminary version. Please do not cite! Abstract We investigate the welfare impact of parallel imports using a large panel data set containing monthly information on sales, ex-factory prices, and further product characteristics for all 700 antidiabetic drugs sold in Germany between 2004 and 2010. We estimate a two-stage nested logit model of demand and, based on an oligopolistic model of multiproduct rms, we then recover the marginal costs and mark-ups. We nally evaluate the eect of the parallel imports' policy by calculating a counter-factual scenario without parallel trade. According to our estimates, parallel imports reduce the prices for patented and generic drugs by 39% and 0.05%, respectively. This amounts to an increase in the demandside surplus by e11.4 million per year which is relatively small compared to the market size of around e470 million. Manufacturers of original drugs, instead, lose more than half of their variable prots when parallel trade is allowed and only a small fraction of these rents are appropriated by the parallel importers. Terms of use: Documents in EconStor may

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Preliminary version. Please do not cite! Abstract We investigate the welfare impact of parallel imports using a large panel data set containing monthly information on sales, ex-factory prices, and further product characteristics for all 700 antidiabetic drugs sold in Germany between 2004 and 2010. We estimate a two-stage nested logit model of demand and, based on an oligopolistic model of multiproduct rms, we then recover the marginal costs and mark-ups. We nally evaluate the eect of the parallel imports' policy by calculating a counter-factual scenario without parallel trade. According to our estimates, parallel imports reduce the prices for patented and generic drugs by 39% and 0.05%, respectively. This amounts to an increase in the demandside surplus by e11.4 million per year which is relatively small compared to the market size of around e470 million. Manufacturers of original drugs, instead, lose more than half of their variable prots when parallel trade is allowed and only a small fraction of these rents are appropriated by the parallel importers. Terms of use: Documents in EconStor may

Umbrella branding is a marketing practice whereby multi-product rms leverage their reputation across dierent product categories. This paper investigates how advertising in the market of over-the-counter (OTC) drugs aects the decision to buy prescription drugs from a promoted brand name. I exploit specic characteristics of market regulation in Germany to identify the eect of advertising and nd positive eects of umbrella branding on sales of prescription drugs. Umbrella branding results in market expansion, particularly for generic rms which invest in OTC drug advertising. If the eect leads to more consumers of generic substitutes or to more patients in undertreated therapeutic areas, market expansion can have a positive eect on welfare.