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Generic entry, price competition, and market segmentation in the prescription drug market – A comment

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  • Izabela Jelovac

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - EM - EMLyon Business School - CNRS - Centre National de la Recherche Scientifique)

Abstract

In this note, we revise the theoretical condition in Regan (2008) under which the price of brand-name drugs increases with the number of generic competitors—a phenomenon known as the generic paradox. We show that this condition derives from the analysis of an interior solution while it actually excludes the existence of an interior solution. Therefore, the theoretical result in Regan (2008) arises from an internal inconsistency.

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  • Izabela Jelovac, 2025. "Generic entry, price competition, and market segmentation in the prescription drug market – A comment," Post-Print hal-05375917, HAL.
    • Handle: RePEc:hal:journl:hal-05375917
    DOI: 10.1016/j.ijindorg.2025.103218
    Note: View the original document on HAL open archive server: https://hal.science/hal-05375917v1
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