Strategic Under-utilization of Patents and Entry Deterrence: The Case of Pharmaceutical Industry
AbstractThis paper seeks to explain why some pharmaceutical companies are observed to withdraw their products before patents are expired and simultaneously introduce new patented (competing) products. Given the specific nature of drug markets, the companies in fact increase the entry cost of the potential generic drug manufacturers and thereby lessen competition for new drugs. The paper determines the optimal date of withdrawing the product and studies comparative static effects of the change of parameters underlying the model.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 19157.
Date of creation: Nov 2009
Date of revision:
Patent protection; patent expiry; pharmaceutical industries; generic drugs; entry cost.;
Find related papers by JEL classification:
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
- NEP-COM-2009-12-19 (Industrial Competition)
- NEP-CSE-2009-12-19 (Economics of Strategic Management)
- NEP-INO-2009-12-19 (Innovation)
- NEP-IPR-2009-12-19 (Intellectual Property Rights)
- NEP-MIC-2009-12-19 (Microeconomics)
- NEP-TID-2009-12-19 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aidan Hollis, 2003. "The Anti-Competitive Effects of Brand-Controlled "Pseudo- Generics" in the Canadian Pharmaceutical Market," Canadian Public Policy, University of Toronto Press, vol. 29(1), pages 21-31, March.
- Gene Grossman & Edwin L.-C. Lai, 2002.
"International Protection of Intellectual Property,"
NBER Working Papers
8704, National Bureau of Economic Research, Inc.
- Grossman, G.M. & Lai, E., 2001. "International Protection of intellectual Property," Papers 215, Princeton, Woodrow Wilson School - Public and International Affairs.
- Gene M Grossman & Edwin L Lai, 2004. "International Protection of Intellectual Property," Levine's Working Paper Archive 122247000000000442, David K. Levine.
- Gene M. Grossman & Edwin L.-C. Lai, 2002. "International Protection of Intellectual Property," CESifo Working Paper Series 790, CESifo Group Munich.
- Grossman, Gene & Lai, Edwin, 2002. "International Protection of Intellectual Property," CEPR Discussion Papers 3118, C.E.P.R. Discussion Papers.
- Ying Kong & James R. Seldon, 2004. "Pseudo-Generic Products and Barriers to Entry in Pharmaceutical Markets," Review of Industrial Organization, Springer, vol. 25(1), pages 71-86, 08.
- Paul Milgrom & John Roberts, 1998.
"Limit Pricing and Entry Under Incomplete Information: An Equilibrium Analysis,"
Levine's Working Paper Archive
245, David K. Levine.
- Milgrom, Paul & Roberts, John, 1982. "Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis," Econometrica, Econometric Society, vol. 50(2), pages 443-59, March.
- Morton I. Kamien & Israel Zang, 1999. "Virtual Patent Extension by Cannibalization," Southern Economic Journal, Southern Economic Association, vol. 66(1), pages 117-131, July.
- Dixit, Avinash, 1980.
"The Role of Investment in Entry-Deterrence,"
Royal Economic Society, vol. 90(357), pages 95-106, March.
- Dixit, Avinash, 1979. "The Role of Investment in Entry-Deterrence," The Warwick Economics Research Paper Series (TWERPS) 140, University of Warwick, Department of Economics.
- Schmalensee, Richard, 1982.
"Product Differentiation Advantages of Pioneering Brands,"
American Economic Review,
American Economic Association, vol. 72(3), pages 349-65, June.
- Schmalensee, Richard., 1980. "Product differentiation advantages of pioneering brands," Working papers 1140-80., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Keith E. Maskus, 1990. "Normative Concerns in the International Protection of Intellectual Property Rights," NBER Chapters, in: New Issues in the Uruguay Round, pages 387-409 National Bureau of Economic Research, Inc.
- Meir Statman, 1981. "The effect of patent expiration on the market position of drugs," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 2(2), pages 61-66, 06.
- Aidan Hollis, 2005. "How do Brands’ “Own Generics” Affect Pharmaceutical Prices?," Review of Industrial Organization, Springer, vol. 27(4), pages 329-350, December.
- Deardorff, Alan V, 1992. "Welfare Effects of Global Patent Protection," Economica, London School of Economics and Political Science, vol. 59(233), pages 35-51, February.
- Aoki, Reiko & Prusa, Thomas J., 1993. "International standards for intellectual property protection and R & D incentives," Journal of International Economics, Elsevier, vol. 35(3-4), pages 251-273, November.
- Marjit, Sugata & Beladi, Hamid, 1998. "Product Versus Process Patents: A Theoretical Approach," Journal of Policy Modeling, Elsevier, vol. 20(2), pages 193-199, April.
- Taylor, M Scott, 1994. "TRIPs, Trade, and Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(2), pages 361-81, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.