A study of the price bubbles in pharmaceutical firms listed in Tehran Stock Exchange

The price bubbles in medical commodities and medications can interrupt the pharmaceutical market. The objective of the present study is to explore the occurrence of price bubbles in the pharmaceutical market of the firms listed in Tehran Stock Exchange (TSE). The present work is of applied and developmental type conducted as an econometric study (time series). The statistical population was composed of 21 pharmaceutical firms listed in TSE for the period of 2012.03-2017.02. Recursive unit root tests (GSADF, RADF, and SADF) were applied for the discovery and date-stamping of the price bubbles. It was revealed that 95 percent of firms have experienced bubbles over the studied period, of which 22 percent were multiple and 78 percent were single. In 2013, 91 percent of the studied firms were encountered with bubbles while it was 62 percent in 2010. In contrast, the results of SADF refuted the existence of bubbles in 57 percent of the studied firms but confirmed that 43 percent of firms have experienced bubbles. Also, SADFG showed that 95 percent of firms have had bubbles over the studied period, of which 17 percent were multiple and 83 percent were single. In 2013, 86 percent of firms were struggling with bubbles, while in 2010, 57 percent have had bubbles.In the pharmaceutical market, we can mitigate the implications of bubbles and control the price of medical and pharmaceutical commodities by early recognition of the price bubbles.