Bacterial cross-resistance and entry deterrence in a market for antibiotics

Roberto Mazzoleni

EconomiA, 2025, vol. 27, issue 1, 110-131

Abstract: PurposeThe goal of the paper is to explore the deterrence strategy of a firm holding a patent on an antibiotic drug when confronting a threat of entry under varying conditions regarding bacterial cross-resistance to prospective competing antibiotic drugs. A second goal is to draw policy implications regarding patent policy as an instrument for combating antibiotic resistance.Design/methodology/approachA two-period model is used to study the output decisions of a patent-holding incumbent confronting potential entry in the second period. First-period output decisions influence the effectiveness of the incumbent antibiotic and prospective competitors in the second period. We compare equilibrium output decisions under varying conditions regarding (1) the duration and scope of patent protection and (2) the degree of bacterial cross-resistance to prospective second-period entrants.FindingsEntry deterrence is more likely (less costly) as prospective entry costs for rivals increase. Whereas entry deterrence against generic competitors requires incumbents to increase output in the first period relative to a setting wherein the threat of entry is absent, a lower output level in the first period is a feature of an optimal entry deterrence strategy when prospective rivals benefit from a low level of bacterial cross-resistance. Stronger patent protection will not necessarily incentivize the patent holder to moderate current use such as to preserve antibiotic drug’s future effectiveness.Originality/valueThe model contributes an important theoretical counterpoint to policy proposals advocating for stronger patents in response to the problem of antibiotic resistance. It also enriches the industrial organization literature on product quality differentiation (incumbent choice of first-period output affects the quality differential between antibiotics in the second period).

Keywords: Antibiotic resistance; Entry deterrence; Antibiotic drug patents (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/econ/article/27/1/110/1249 ... -entry-deterrence-in (text/html)
https://www.emerald.com/econ/article-pdf/27/1/110/ ... n-08-2023-0136en.pdf (application/pdf)

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:eme:econpp:econ-08-2023-0136

DOI: 10.1108/ECON-08-2023-0136

Access Statistics for this article

EconomiA is currently edited by Professor Joaquim Andrade

More articles in EconomiA from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().