Abstract
In recent years, the system for the separation of dispensing and prescribing functions (SDP) has progressed in Japan. However, because of the failure of the healthcare system, it is difficult to estimate how the system of SDP contributes to the improvement of patient utility and welfare. In this paper, I try to evaluate the SDP by analyzing the strategic behavior of dispensing pharmacies, employing some economic models under imperfect information. In these models, quality is characterized as a strategic variable in monopolistic or duopolistic competition. As a result, I show that competition among dispensing pharmacies in the SDP raises the quality of pharmaceutical services, but there is some possibility of "excess entry" with free entry.
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