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Mergers and Barriers to Entry in Pharmaceutical Markets
[journal article]
Abstract After patent expirations in pharmaceutical markets, brand-name laboratories are threatened by generic firms' entry. To fill the gap in the theoretical literature on this topic, we study brand-name firms' incentives either to deter entry, or to merge with the entrant. These strategies are considered ... view more
After patent expirations in pharmaceutical markets, brand-name laboratories are threatened by generic firms' entry. To fill the gap in the theoretical literature on this topic, we study brand-name firms' incentives either to deter entry, or to merge with the entrant. These strategies are considered along with the possibility of the brand-name firm producing its own generic drug, called a pseudo-generic drug. Using a vertical differentiation model with Bertrand-Stackelberg competition, we show that each strategy, merging and deterring entry, may be Nash equilibrium, according to the generic firm's setup cost level and to the rate of discount.... view less
Classification
Economic Sectors
Basic Research, General Concepts and History of Economics
Document language
English
Publication Year
2009
Page/Pages
p. 297-309
Journal
Applied Economics, 42 (2009) 3
DOI
https://doi.org/10.1080/00036840701604495
ISSN
1466-4283
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)