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KMID : 1170320220280030079
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Korean Journal of Health Economics and Policy
2022 Volume.28 No. 3 p.79 ~ p.107
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Entry trials of online pharmacies into the sales market of prescription drugs and the pharmaceutical association’s actions against it ? Exploration of the implications using the reputation building model in game theory
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Lee Jae-Hee
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Abstract
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In this research we analyze, using the reputation building model in game theory, the competition between online pharmacies and incumbent pharmacies of traditional sales model with online pharmacies recently penetrating the sales market of prescription drugs in Korea. The sequential equilibrium of the model provides the implication that realistic type of traditional pharmacies can maximize its expected net revenue by executing mixed strategies. However, with the recent change in the situation of prescription drug sales market in Korea including rapid growth of the online prescription drugs market and increase in positive experiences from using online delivery of prescription drug among patients during the COVID-19, the strategies considering employing new business models including co-founding regional telemedicine platforms together with regional associations of medical doctors are suggested for pharmacies of traditional sales model.
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KEYWORD
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online pharmacy, telemedicine, reputation building, sequential equilibrium
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