\documentclass[12pt]{article} %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% %TCIDATA{OutputFilter=LATEX.DLL} %TCIDATA{Version=4.00.0.2312} %TCIDATA{Created=Thu Feb 20 13:10:55 1997} %TCIDATA{LastRevised=Wednesday, August 13, 2003 08:13:13} %TCIDATA{} %TCIDATA{Language=American English} \setlength{\jot}{0.4cm} \setlength{\parskip}{0.015cm} \tabcolsep 2.8pt \input tcilatex \begin{document} \title{} \thispagestyle{empty}\endtitlepage\eject \section*{Appendix B} \noindent \emph{Autocorrelation coefficients\medskip } The partial\footnotemark autocorrelation coefficients, $\rho $, and their associated standard errors are presented in Table AI for the first 16 lags of the residual from the least squares estimates for equations (8) and (9). The results show that there is some autocorrelation mainly in the first two lags of the residual. However, the autocorrelation coefficients rapidly decline after the two first lags. As the serial correlation decline as the number of lags increases, and as the number of time periods for each substance is quite large, least squares estimates are still consistent and unbiased, but inefficient. Thus, the use of a Newey-West (1987) covariance matrix is appropriate in order to come to terms with this problem.\bigskip \ \ - - - Table AI about here - - -\bigskip \noindent \emph{Summary statistics\medskip } In Table A II below, means and standard deviations are presented for the variables used in the estimation of equation (8). Note that the SIZE and SIZE*DPAT measures have been calculated using the official SMPA statistics regarding quantity which report the number of sold packages by the hundred. This quantity has then been multiplied by the deflated price series using 1990 as base year and normalized to 100 to calculate our SIZE measure. In addition, one can easily verify the accuracy of the mean for the reference price system dummy variable, DREF. As the reference price system was introduced in the first quarter of 1993 (i.e. 12 quarters before the last observations in our data) multiplying DREF by T should give a result of 12 (except for rounding errors). Taking Cimetidine as an example, $% 57*0.21=11.97$. Repeating this for all substances will give the same result. \ \ \bigskip - - - Table AII about here - - -\bigskip \noindent \emph{Notes\medskip } \noindent $^1$I.e., controlling for independent variables and other lag lengths of the residual. \pagebreak \noindent \begin{tabular}{lrrcrr} \multicolumn{6}{l}{\small Table AI. Autocorrelation coefficients} \\ \hline\hline & \multicolumn{2}{c}{\small Model 1} & & \multicolumn{2}{c}{\small Model 2} \\ \hline & $\rho $ & {\small s.e} & \multicolumn{1}{r}{} & $\rho $ & {\small s.e.} \\ \hline \multicolumn{1}{c}{$\varepsilon _{t-1}$} & {\small 0.51} & {\small 0.16} & \multicolumn{1}{r}{} & {\small 0.51} & {\small 0.16} \\ \multicolumn{1}{c}{$\varepsilon _{t-2}$} & {\small 0.25} & {\small 0.13} & \multicolumn{1}{r}{} & {\small 0.23} & {\small 0.12} \\ \multicolumn{1}{c}{$\varepsilon _{t-3}$} & {\small 0.03} & {\small 0.07} & \multicolumn{1}{r}{} & {\small 0.03} & {\small 0.07} \\ \multicolumn{1}{c}{$\varepsilon _{t-4}$} & {\small 0.17} & {\small 0.08} & \multicolumn{1}{r}{} & {\small 0.18} & {\small 0.08} \\ \multicolumn{1}{c}{$\varepsilon _{t-5}$} & {\small -0.03} & {\small 0.04} & \multicolumn{1}{r}{} & {\small -0.05} & {\small 0.05} \\ \multicolumn{1}{c}{$\varepsilon _{t-6}$} & {\small -0.03} & {\small 0.03} & \multicolumn{1}{r}{} & {\small -0.03} & {\small 0.04} \\ \multicolumn{1}{c}{$\varepsilon _{t-7}$} & {\small -0.06} & {\small 0.04} & \multicolumn{1}{r}{} & {\small -0.05} & {\small 0.04} \\ \multicolumn{1}{c}{$\varepsilon _{t-8}$} & {\small 0.06} & {\small 0.04} & \multicolumn{1}{r}{} & {\small 0.06} & {\small 0.04} \\ \multicolumn{1}{c}{$\varepsilon _{t-9}$} & {\small -0.08} & {\small 0.06} & \multicolumn{1}{r}{} & {\small -0.07} & {\small 0.05} \\ \multicolumn{1}{c}{$\varepsilon _{t-10}$} & {\small -0.15} & {\small 0.13} & \multicolumn{1}{r}{} & {\small -0.14} & {\small 0.05} \\ \multicolumn{1}{c}{$\varepsilon _{t-11}$} & {\small 0.06} & {\small 0.08} & \multicolumn{1}{r}{} & {\small 0.05} & {\small 0.09} \\ \multicolumn{1}{c}{$\varepsilon _{t-12}$} & {\small 0.10} & {\small 0.06} & \multicolumn{1}{r}{} & {\small 0.10} & {\small 0.06} \\ \multicolumn{1}{c}{$\varepsilon _{t-13}$} & {\small -0.06} & {\small 0.03} & \multicolumn{1}{r}{} & {\small -0.07} & {\small 0.04} \\ \multicolumn{1}{c}{$\varepsilon _{t-14}$} & {\small 0.03} & {\small 0.04} & \multicolumn{1}{r}{} & {\small 0.02} & {\small 0.04} \\ \multicolumn{1}{c}{$\varepsilon _{t-15}$} & {\small -0.03} & {\small 0.03} & \multicolumn{1}{r}{} & {\small -0.02} & {\small 0.03} \\ \multicolumn{1}{c}{$\varepsilon _{t-16}$} & {\small 0.01} & {\small 0.02} & \multicolumn{1}{r}{} & {\small 0.02} & {\small 0.02} \\ \hline \end{tabular} \medskip \noindent \begin{tabular}{lcccccccc} \multicolumn{9}{l}{\small Table AII. Summary statistics} \\ \hline\hline {\small Substance} & {\small PRICE} & {\small SIZE} & {\small SIZE} & {\small DPAT} & {\small DREF} & {\small GEN} & {\small GEN93} & {\small T} \\ & & & {\small *DPAT} & & & & {\small *DREF} & \\ \hline {\small Cimetedine} & {\small 128.91} & {\small 2161.88} & {\small 2161.88} & {\small 1.00} & {\small 0.21} & {\small 2.79} & {\small 0.21} & {\small 57} \\ & {\small (62.51)} & {\small (1941.19)} & {\small (1941.19)} & {\small (0.00)% } & {\small (0.41)} & {\small (1.26)} & {\small (0.41)} & \\ {\small Sukralfate} & {\small 107.25} & {\small 1332.29} & {\small 1332.29} & {\small 1.00} & {\small 0.24} & {\small 0.80} & {\small 0.24} & {\small 49} \\ & {\small (17.91)} & {\small (550.99)} & {\small (550.99)} & {\small (0.00)} & {\small (0.43)} & {\small (0.41)} & {\small (0.43)} & \\ {\small Etacrynic acid} & {\small 115.22} & {\small 59.49} & {\small 22.14} & {\small 0.71} & {\small 0.13} & {\small 0.00} & {\small 0.00} & {\small 96} \\ & {\small (24.24)} & {\small (57.54)} & {\small (17.79)} & {\small (0.46)} & {\small (0.33)} & {\small (0.00)} & {\small (0.00)} & \\ {\small Atenolol} & {\small 108.10} & {\small 3955.01} & {\small 1699.98} & {\small 0.50} & {\small 0.17} & {\small 1.50} & {\small 0.17} & {\small 72} \\ & {\small (35.42)} & {\small (1584.39)} & {\small (2104.50)} & {\small (0.50)% } & {\small (0.38)} & {\small 1.88} & {\small (0.38)} & \\ {\small Pindolol} & {\small 110.29} & {\small 2120.08} & {\small 648.91} & {\small 0.55} & {\small 0.14} & {\small 0.82} & {\small 0.14} & {\small 88} \\ & {\small (27.96)} & {\small (1263.18)} & {\small (748.04)} & {\small (0.50)} & {\small (0.35)} & {\small (0.99)} & {\small (0.35)} & \\ {\small Azapropazone} & {\small 129.15} & {\small 301.37} & {\small 86.84} & {\small 0.79} & {\small 0.17} & {\small 0.00} & {\small 0.00} & {\small 72} \\ & {\small (32.06)} & {\small (473.38)} & {\small (122.74)} & {\small (0.41)} & {\small (0.38)} & {\small (0.00)} & {\small (0.00)} & \\ {\small Diklofenac} & {\small 107.03} & {\small 2231.22} & {\small 1991.34} & {\small 0.84} & {\small 0.21} & {\small 0.59} & {\small 0.21} & {\small 56} \\ & {\small (22.87)} & {\small (598.22)} & {\small (976.51)} & {\small (0.37)} & {\small (0.41)} & {\small (0.50)} & {\small (0.41)} & \\ {\small Naproxen} & {\small 102.62} & {\small 2036.92} & {\small 1677.30} & {\small 0.73} & {\small 0.20} & {\small 2.40} & {\small 0.20} & {\small 60} \\ & {\small (401.60)} & {\small (818.92)} & {\small (1211.39)} & {\small (0.45)% } & {\small (0.40)} & {\small (0.40)} & {\small (0.40)} & \\ {\small Piroxicam} & {\small 95.21} & {\small 195.45} & {\small 129.99} & {\small 0.63} & {\small 0.29} & {\small 0.27} & {\small 0.00} & {\small 41} \\ & {\small (19.23)} & {\small (57.68)} & {\small (106.71)} & {\small (0.49)} & {\small (0.46)} & {\small (0.45)} & {\small (0.00)} & \\ {\small Sulindac} & {\small 111.45} & {\small 875.19} & {\small 186.75} & {\small 0.42} & {\small 0.23} & {\small 0.00} & {\small 0.00} & {\small 53} \\ & {\small (21.95)} & {\small (443.41)} & {\small (239.76)} & {\small (0.50)} & {\small (0.42)} & {\small (0.00)} & {\small (0.00)} & \\ {\small Lorazepam} & {\small 110.18} & {\small 1489.96} & {\small 1484.92} & {\small 0.95} & {\small 0.19} & {\small 0.00} & {\small 0.00} & {\small 64} \\ & {\small (22.50)} & {\small (644.22)} & {\small (655.10)} & {\small (0.21)} & {\small (0.39)} & {\small (0.00)} & {\small (0.00)} & \\ {\small Oxazepam} & {\small 121.84} & {\small 7666.89} & {\small 7666.89} & {\small 1.00} & {\small 0.13} & {\small 0.74} & {\small 0.13} & {\small 96} \\ & {\small (35.99)} & {\small (3028.16)} & {\small (3028.16)} & {\small (0.00)% } & {\small (0.33)} & {\small (0.93)} & {\small (0.33)} & \\ {\small Clomipramine} & {\small 117.05} & {\small 1865.29} & {\small 1600.25} & {\small 0.85} & {\small 0.13} & {\small 0.21} & {\small 0.13} & {\small 91} \\ & {\small (17.12)} & {\small (657.48)} & {\small (918.96)} & {\small (0.36)} & {\small (0.34)} & {\small (0.41)} & {\small (0.34)} & \\ {\small Lofepramine} & {\small 100.82} & {\small 1177.34} & {\small 965.41} & {\small 0.66} & {\small 0.18} & {\small 0.00} & {\small 0.00} & {\small 65} \\ & {\small (9.26)} & {\small (574.92)} & {\small (793.90)} & {\small (0.48)} & {\small (0.39)} & {\small (0.00)} & {\small (0.00)} & \\ {\small Maprotiline} & {\small 113.37} & {\small 1191.05} & {\small 1191.05} & {\small 1.00} & {\small 0.16} & {\small 0.47} & {\small 0.16} & {\small 75} \\ & {\small (17.39)} & {\small (474.85)} & {\small (474.85)} & {\small (0.0)} & {\small (0.37)} & {\small (0.83)} & {\small (0.37)} & \\ {\small Miaserine} & {\small 88.51} & {\small 377.58} & {\small 377.58} & {\small 1.00} & {\small 0.50} & {\small 0.54} & {\small 0.00} & {\small 24} \\ & {\small (6.26)} & {\small (137.89)} & {\small (137.89)} & {\small (0.00)} & {\small (0.51)} & {\small (0.83)} & {\small (0.00)} & \\ {\small Protriptyline} & {\small 118.98} & {\small 114.20} & {\small 28.83} & {\small 0.65} & {\small 0.13} & {\small 0.00} & {\small 0.00} & {\small 96} \\ & {\small (28.23)} & {\small (119.06)} & {\small (28.64)} & {\small (0.48)} & {\small (0.33)} & {\small (0.00)} & {\small (0.00)} & \\ {\small Diprivefrin} & {\small 92.11} & {\small 1152.91} & {\small 1139.56} & {\small 0.86} & {\small 0.41} & {\small 0.52} & {\small 0.41} & {\small 29} \\ & {\small (13.51)} & {\small (515.53)} & {\small (542.95)} & {\small (0.35)} & {\small (0.50)} & {\small (0.51)} & {\small (0.50)} & \\ \hline \end{tabular} \end{document}