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Anti-counterfeiting policy at pharmaceutical market: Game-theoretic analysis

Author

Listed:
  • Fridman, A.

    (HSE University, Moscow, Russia)

  • Verbetskaia, V.

    (Erasmus University Rotterdam, Netherlands)

Abstract

We propose a model where foreign producer of authentic remedies competes strategically with domestic producer of generic remedies in presence of competitive producers of falsified authentic remedies. Three approaches to combating of counterfeits are considered: quality control; mandatary labeling and internal regulation via full or partial state-ownership in the capital of domestic producer of generic remedies. It was demonstrated that all three instruments reduce the share of falsified authentic remedies but stricter quality control as well as mandatory labeling may nevertheless bring an increase in the volume of falsified remedies' sales. Internal regulation via increased state ownership in domestic firm always decreases both the share and the volume of falsified remedies' sales and improves national welfare. The impact of stricter quality control and introduction of mandatory labeling on national welfare is ambiguous and depends on quality preferences: these policies improve welfare in case of high quality valuation and reduce welfare otherwise.

Suggested Citation

  • Fridman, A. & Verbetskaia, V., 2025. "Anti-counterfeiting policy at pharmaceutical market: Game-theoretic analysis," Journal of the New Economic Association, New Economic Association, vol. 66(1), pages 159-176.
    • Handle: RePEc:nea:journl:y:2025:i:66:p:159-176
    DOI: 10.31737/22212264_2025_1_159-176
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    falsified remedies; strategic competition; welfare; anti-counterfeiting policy;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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