International trade in branded and generic products

Yoonho Choi and E. Kwan Choi

The World Economy, 2018, vol. 41, issue 8, 1965-1975

Abstract: This paper investigates international competition between an innovating firm in a developed economy and generic producers in developing countries. Initially, the innovating firm in a developed country exports the branded product to a developing country. Once a patent expires or when the government grants a licence to local firms to produce generic equivalents, the innovating firm is forced to compete with generic producers. Under certain conditions, entry of generic firms reduces the price of the branded product and a generic competition paradox does not occur. There are two possible long‐run equilibrium solutions. In one scenario, the innovating firm which exports the branded product and the local generic producers may coexist in the developing country. In the other scenario, the brand producer exits and a trade reversal may occur, that is, the developing country may even export the generic products to the developed economy.

Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/twec.12589

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:41:y:2018:i:8:p:1965-1975

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0378-5920

Access Statistics for this article

The World Economy is currently edited by David Greenaway

More articles in The World Economy from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().