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Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry


  • Appelt, Silvia


Patent holders attempt to mitigate the loss of monopoly power by authorizing generic entry prior to patent expiry (early entry). Off-patent competition may be adversely affected if early entry substantially lowers the attractiveness of subsequent generic entry. This study assesses the impact of early entry, examining generic entry decisions made in the course of recent patent expiries. Using micro data and accounting for the endogeneity of early entry, I estimate recursive bivariate probit models of entry. Early entry has no significant impact on the likelihood of generic entry. Rent-seeking rather than strategic entry-deterrence motives drive early entry decisions.

Suggested Citation

  • Appelt, Silvia, 2010. "Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 357, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  • Handle: RePEc:trf:wpaper:357

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    References listed on IDEAS

    1. Magazzini, Laura & Pammolli, Fabio & Riccaboni, Massimo, 2004. "Dynamic Competition in Pharmaceuticals: Patent Expiry, Generic Penetration, and Industry Structure," MPRA Paper 15968, University Library of Munich, Germany.
    2. Iván Moreno Torres & Jaume Puig & Joan-Ramon Borrell-Arqué, 2007. "Generic entry into a regulated pharmaceutical market," Economics Working Papers 1014, Department of Economics and Business, Universitat Pompeu Fabra.
    3. repec:adr:anecst:y:2006:i:83-84:p:10 is not listed on IDEAS
    4. Wilde, Joachim, 2000. "Identification of multiple equation probit models with endogenous dummy regressors," Economics Letters, Elsevier, vol. 69(3), pages 309-312, December.
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    Cited by:

    1. WAN, Jiangyun(Yunyun), 2016. "Brand Loyalty and Generic Competition," IIR Working Paper 16-01, Institute of Innovation Research, Hitotsubashi University.
    2. 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.

    More about this item


    Generic Entry; Early Entry; Anticompetitive Practices;

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions


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