Secondary Markets and the Opioid Crisis: Evidence from a Laboratory Experiment, with Daniel Houser
We study the effect of shutting down the secondary market on physicians' prescription behavior using an equilibrium model developed by Schnell (2017) and provide empirical knowledge through a lab experiment. This theory-guided experiment shows strong evidence that shutting down the secondary market is beneficial not only due to the reduced drug diversions but the decreasing in total prescriptions of opioids. Compared to other empirical studies, where the data were always collected from a secondary-market-present real world, this paper takes advantage of the lab environment that completely remove the secondary market to provide data and insights of this otherwise data-absent case.
Work in Progress