Diffusing Innovations Under Market Competition: Evidence from Drug-Eluting Stents
This paper examines how hospital competition and insurance reimbursement policies shape the diffusion of medical innovations. Using patient-level data from Taiwan’s drug-eluting stent (DES) market in the Taipei area, we estimate a structural model that integrates patient demand with hospitals’ endogenous portfolio and pricing decisions. We document a fundamental trade-off: intensified competition reduces prices but weakens hospitals’ incentives to adopt new technologies. Counterfactual simulations that vary market structure and incorporate selective contracting or targeted patient coupons show that the effectiveness of reimbursement policies depends critically on hospitals’ strategic responses and the surrounding competitive environment.
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Copy CitationGinger Zhe Jin, Hsienming Lien, and Xuezhen Tao, "Diffusing Innovations Under Market Competition: Evidence from Drug-Eluting Stents," NBER Working Paper 34374 (2025), https://doi.org/10.3386/w34374.Download Citation
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