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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
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    File URL: https://mpra.ub.uni-muenchen.de/19157/1/MPRA_paper_19157.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    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.

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    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

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    This paper has been announced in the following NEP Reports:

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