Spatial dynamics of public pharmaceutical expenditure

Abstract

A regression model for per capita public pharmaceutical expenditure is analyzed. The necessity of simultaneouslycontrolling for dynamic patterns and spatial spillover in such analyses is demonstrated. In contrast to previous studies ofimpact of small-area variation, the present study exploits important aspects related to spatial dynamics as the effects ofspatial spillover are analyzed and interpreted within a framework of spatial dynamics and spatial error-correction. It isshown that such dynamics bear important implications related to spatial convergence of a pharmaceutical market. Thepaper is accessible to an audience experienced with linear regression; basic exposure to spatial statistics is helpful butnot strictly necessary.