The Pharmacy Around the Corner or One Click Away? : An Analysis of Pricing and Product Range in Urban, Rural and Online Pharmacies

The Swedish pharmacy market has undergone significant changes during the 2000s. It transitioned from a state-owned monopoly to a market open to competition. Today, the competitive landscape is shaped not only by a larger number of physical actors but also by a growing presence of e-commerce. Access to pharmacies varies geographically, with differences in pharmacy density between rural areas and bigger cities. This raises questions about how competition is manifested in practice, especially regarding pricing, product range and the impact on consumers. The aim of this study is to examine the state of competition in the pharmacy market. To gain a deeper understanding, observations were conducted at pharmacies in Linköping and Åtvidaberg, representing both an urban and a rural area. Online pharmacy actors were also included to explore how their presence affects market competition. A strategic selection of pharmacies and products was made to ensure relevance. The theoretical framework is based on economic models and concepts related to competition and market structures, which served as the foundation for the analysis of the results. The observations yielded valuable results. It was found that online pharmacies consistently offered the lowest prices on the market. The results also indicated a degree of centralized pricing among the actors, particularly within physical pharmacies. Furthermore, the study showed that the rural pharmacy in Åtvidaberg, despite holding a local monopoly, did not demonstrate monopolistic behavior regarding pricing or product assortment. The study also revealed certain limitations in the range of products available at both physical and online pharmacies. The study shows that the Swedish pharmacy market, despite its high concentration and limited number of actors, displays clear signs of effective competition, especially through pricing. The market structure aligns well with the theory of Bertrand oligopoly, where a few firms offering homogeneous products compete primarily on price. The results suggest that individual actors possess limited market power, which helps keep prices low even in geographic areas with a local monopoly. Altogether, this indicates that the competition in practice functions relatively well, despite market concentration and the presence of structural entry barriers.