@techreport{NBERw7024,
 title = "Network Effects and Diffusion in Pharmaceutical Markets:  Antiulcer Drugs",
 author = "Ernst R. Berndt and Robert S. Pindyck and Pierre Azoulay",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "7024",
 year = "1999",
 month = "March",
 URL = "http://www.nber.org/papers/w7024",
 abstract = {We examine the role of network effects in the demand for pharmaceuticals at both the brand level and for a therapeutic class of drugs.  These effects emerge when use of a drug by others conveys information about its efficacy and safety to patients and physicians.  This can lead to herd behavior where a particular drug -- not necessarily the most efficacious or safest -- can come to dominate the market despite the availability of close substitutes, and can also affect the rate of market diffusion.  Using data for H2-antagonist antiulcer drugs, we examine two aspects of these effects.  First, we use hedonic price procedures to estimate how the aggregate usage of a drug affects brand valuation.  Second, we estimate discrete-time diffusion models at both the industry and brand levels to measure the impact on rates of diffusion and market saturation.},
}