IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/19157.html
   My bibliography  Save this paper

Strategic Under-utilization of Patents and Entry Deterrence: The Case of Pharmaceutical Industry

Author

Listed:
  • Marjit, Sugata
  • Kabiraj, Tarun
  • Dutta, Arijita

Abstract

This 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.

Suggested Citation

  • Marjit, Sugata & Kabiraj, Tarun & Dutta, Arijita, 2009. "Strategic Under-utilization of Patents and Entry Deterrence: The Case of Pharmaceutical Industry," MPRA Paper 19157, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:19157
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/19157/1/MPRA_paper_19157.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Milgrom, Paul & Roberts, John, 1982. "Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis," Econometrica, Econometric Society, vol. 50(2), pages 443-459, March.
    2. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
    3. Gene M. Grossman & Edwin L.-C. Lai, 2004. "International Protection of Intellectual Property," American Economic Review, American Economic Association, vol. 94(5), pages 1635-1653, December.
    4. Lanjouw, Jean O., 1997. "The Introduction of Pharmaceutical Product Patents in India: "Heartless Exploitation of the Poor and Suffering"?," Center Discussion Papers 28385, Yale University, Economic Growth Center.
    5. Ying Kong & James R. Seldon, 2004. "Pseudo-Generic Products and Barriers to Entry in Pharmaceutical Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(1), pages 71-86, August.
    6. 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.
    7. 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 361-381, May.
    8. Diwan, Ishac & Rodrik, Dani, 1991. "Patents, appropriate technology, and North-South trade," Journal of International Economics, Elsevier, vol. 30(1-2), pages 27-47, February.
    9. 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.
    10. Morton I. Kamien & Israel Zang, 1999. "Virtual Patent Extension by Cannibalization," Southern Economic Journal, John Wiley & Sons, vol. 66(1), pages 117-131, July.
    11. Schmalensee, Richard, 1982. "Product Differentiation Advantages of Pioneering Brands," American Economic Review, American Economic Association, vol. 72(3), pages 349-365, June.
    12. Aidan Hollis, 2005. "How do Brands’ “Own Generics” Affect Pharmaceutical Prices?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(4), pages 329-350, December.
    13. Marjit, Sugata & Beladi, Hamid, 1998. "Product Versus Process Patents: A Theoretical Approach," Journal of Policy Modeling, Elsevier, vol. 20(2), pages 193-199, April.
    14. 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, June.
    15. 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.
    16. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lakdawalla, Darius & Sood, Neeraj, 2013. "Health insurance as a two-part pricing contract," Journal of Public Economics, Elsevier, vol. 102(C), pages 1-12.
    2. Schubert, Stefanie & Jost, Peter-J., 2015. "Beat the gun - protection against zero-profit imitation," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113045, Verein für Socialpolitik / German Economic Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Leonard F.S. Wang & Arijit Mukherjee, 2014. "Patent Protection, Innovation and Technology Licensing," Australian Economic Papers, Wiley Blackwell, vol. 53(3-4), pages 245-254, December.
    2. Gino A.Gancia, 2003. "Globalization, Divergence and Stagnation," Development Working Papers 174, Centro Studi Luca d'Agliano, University of Milano.
    3. Hudson, John & Minea, Alexandru, 2013. "Innovation, Intellectual Property Rights, and Economic Development: A Unified Empirical Investigation," World Development, Elsevier, vol. 46(C), pages 66-78.
    4. Schäfer, Andreas & Schneider, Maik T., 2015. "Endogenous Enforcement Of Intellectual Property, North–South Trade, And Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 19(5), pages 1074-1115, July.
    5. Sumner J. La Croix & Denise Eby Konan, 2002. "Intellectual Property Rights in China: The Changing Political Economy of Chinese–American Interests," The World Economy, Wiley Blackwell, vol. 25(6), pages 759-788, June.
    6. Panle Jia & Pinelopi K. Goldberg & Shubham Chaudhuri, 2006. "Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case Study of Quinolones in India," American Economic Review, American Economic Association, vol. 96(5), pages 1477-1514, December.
    7. Arijit Mukherjee, 2017. "Patent Protection and R&D with Endogenous Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 65(1), pages 220-234, March.
    8. Andreas Schaefer, 2017. "Enforcement of Intellectual Property, Pollution Abatement, and Directed Technical Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(3), pages 457-480, March.
    9. Ricardo Gonçalves & Vasco Rodrigues & Hélder Vasconcelos, 2015. "Reference pricing in the presence of pseudo-generics," International Journal of Health Economics and Management, Springer, vol. 15(3), pages 281-305, September.
    10. 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.
    11. Mukherjee, Arijit & Neogi, Chiranjib, 2014. "Vertical technology transfer and the welfare implications of patent protection," Research in Economics, Elsevier, vol. 68(3), pages 239-247.
    12. Lin, Hwan C., 2010. "Technology diffusion and global welfare effects: Imitative R&D vs. South-bound FDI," Structural Change and Economic Dynamics, Elsevier, vol. 21(4), pages 231-247, November.
    13. Smith, Pamela J., 1999. "Are weak patent rights a barrier to U.S. exports?," Journal of International Economics, Elsevier, vol. 48(1), pages 151-177, June.
    14. Gancia, Gino & Bonfiglioli, Alessandra, 2008. "North-South trade and directed technical change," Journal of International Economics, Elsevier, vol. 76(2), pages 276-295, December.
    15. Laurent Granier & Sébastien Trinquard, 2011. "Predation in Off-Patent Drug Markets," Post-Print hal-00687806, HAL.
    16. Richard G. Frank & David S. Salkever, 1991. "Pricing, Patent Loss and the Market For Pharmaceuticals," NBER Working Papers 3803, National Bureau of Economic Research, Inc.
    17. Forero-Pineda, Clemente, 2006. "The impact of stronger intellectual property rights on science and technology in developing countries," Research Policy, Elsevier, vol. 35(6), pages 808-824, July.
    18. Jean O. Lanjouw, 2003. "Intellectual Property and the Availability of Pharmaceuticals in Poor Countries," NBER Chapters, in: Innovation Policy and the Economy, Volume 3, pages 91-130, National Bureau of Economic Research, Inc.
    19. Moonsung Kang, 2009. "Understanding Agreements on TRIPS and Subsidies in Tandem," Open Economies Review, Springer, vol. 20(2), pages 225-240, April.
    20. Jean O. Lanjouw & Iain Cockburn, 2000. "Do Patents Matter?: Empirical Evidence after GATT," NBER Working Papers 7495, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Patent protection; patent expiry; pharmaceutical industries; generic drugs; entry cost.;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:19157. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.