L8 Consumer search

Question 1

Answer 1

Question 2

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Question 3

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Question 4

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Question 5

Answer 5

Seeks to establish the empirical importance of price dispersion due to costly consumer search by examining retail prices for prescription drugs.

Drug prices across competing pharmacies within defined markets. State legislation in New York requires all pharmacies to post their prices for 152 top-selling prescriptions. The prices are posted and updated on a large poster provided by the State Board of Pharmacy.

The empirical analysis hinges on the observation that consumers incentives to price-shop depend on characteristics of the drug therapy.

The data used in the paper were copied directly from the posters of 20 pharmacies in Middletown and Newburgh, New York (isolated towns) in March 1998, along with pharmacy characteristics.

Data on drug characteristics were collected from Mosbyís GenRx (1998), a large pharmaceutical reference manual.

Question 6

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Question 7

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