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From Free Entry to Patent Protection: Welfare Implications for the Indian Pharmaceutical Industry


  • Antara Dutta

    (Compass Lexecon, Washington, D.C.)


There has been fierce debate over the imposition of stronger intellectual property rights laws for pharmaceutical products in developing countries. This paper uses data from the Indian pharmaceutical industry to develop a structural model of demand, supply and entry. The estimation yields demand and supply parameters that indicate significant heterogeneity among firms both within and across different therapeutic segments. The estimated parameters are used to simulate patent enforcement and price deregulation for 43 drugs, which predicts large losses for consumers and relatively small gains in profits for the global patent holders. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Antara Dutta, 2011. "From Free Entry to Patent Protection: Welfare Implications for the Indian Pharmaceutical Industry," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 160-178, February.
  • Handle: RePEc:tpr:restat:v:93:y:2011:i:1:p:160-178

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    Cited by:

    1. Susan J. Méndez, 2016. "Parallel Trade of Pharmaceuticals: The Danish Market for Statins," Melbourne Institute Working Paper Series wp2016n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    2. Bhaskarabhatla, Ajay & Chatterjee, Chirantan, 2017. "The role of physicians in prescribing irrational fixed-dose combination medicines in India," Social Science & Medicine, Elsevier, vol. 174(C), pages 179-187.
    3. Lee G. Branstetter & Chirantan Chatterjee & Matthew Higgins, 2011. "Regulation and Welfare: Evidence from Paragraph IV Generic Entry in the Pharmaceutical Industry," NBER Working Papers 17188, National Bureau of Economic Research, Inc.
    4. Arcidiacono, Peter & Ellickson, Paul B. & Landry, Peter & Ridley, David B., 2013. "Pharmaceutical followers," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 538-553.
    5. Bond, Eric W. & Saggi, Kamal, 2014. "Compulsory licensing, price controls, and access to patented foreign products," Journal of Development Economics, Elsevier, vol. 109(C), pages 217-228.
    6. Eric W Bond & Kamal Saggi, 2017. "Price controls versus compulsory licensing: effects on patent-holders and consumers," Vanderbilt University Department of Economics Working Papers 17-00013, Vanderbilt University Department of Economics.
    7. Suppliet, Moritz, 2017. "Umbrella Branding in Pharmaceutical Markets," Discussion Paper 2017-034, Tilburg University, Tilburg Law and Economic Center.
    8. Tomaso Duso & Annika Herr & Moritz Suppliet, 2014. "The Welfare Impact Of Parallel Imports: A Structural Approach Applied To The German Market For Oral Anti‐Diabetics," Health Economics, John Wiley & Sons, Ltd., vol. 23(9), pages 1036-1057, September.
    9. Kamal Saggi, 2016. "Trade, Intellectual Property Rights, and the World Trade Organization," Vanderbilt University Department of Economics Working Papers 16-00014, Vanderbilt University Department of Economics.
    10. In Kyung Kim & Yoon-Jin Lee & Young-Ro Yoon, 2017. "Sequential Supply Decision and Market Efficiency: Theory and Evidence," Working Papers 1703, Nazarbayev University, Department of Economics, revised Mar 2017.
    11. Chatterjee, Chirantan & Kubo, Kensuke & Pingali, Viswanath, 2015. "The consumer welfare implications of governmental policies and firm strategy in markets for medicines," Journal of Health Economics, Elsevier, vol. 44(C), pages 255-273.
    12. repec:iae:iaewps:wp2016n8 is not listed on IDEAS

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