Monday, January 4, 2010
Posted by D. Daniel Sokol
Sugata Marjit - Centre for Studies in Social Sciences, Tarun Kabiraj - Indian Statistical Institute, and Arijita Dutta - Calcutta University, have posted a paper on Strategic Under-utilization of Patents and Entry Deterrence: The Case of Pharmaceutical Industry.
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.