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Pseudo-Generic Products and Barriers to Entry in Pharmaceutical Markets

  • Ying Kong


    (Department of Economics, The University College of Cariboo, Kamloops, BC, Canada V2C SN3. Tel.: +1-250-828-5000)

  • James R. Seldon
Registered author(s):

    This paper examines incentives for brand-name pharmaceutical producers to market pseudo-generic versions of their own branded products upon the expiry of patent protection.Using a two-stage game model, we determine that under plausible demand and cost conditions, brand-name incumbents can find it profitable to produce pseudo-generics as a means of blocking rivals' entry even when independent firms producing true generics face low entry costs.The model shows that social welfare can be higher when firms use pseudo-generics instead of capacity for entry deterrence as long as substitutability between brand-name and generic products is sufficiently high.

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    Article provided by Springer in its journal Review of Industrial Organization.

    Volume (Year): 25 (2004)
    Issue (Month): 1 (08)
    Pages: 71-86

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    Handle: RePEc:kap:revind:v:25:y:2004:i:1:p:71-86
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