Anti-counterfeiting policy at pharmaceutical market: Game-theoretic analysis

A. Fridman and V. Verbetskaia
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A. Fridman: HSE University, Moscow, Russia
V. Verbetskaia: Erasmus University Rotterdam, Netherlands

Journal of the New Economic Association, 2025, vol. 66, issue 1, 159-176

Abstract: We propose a model where foreign producer of authentic remedies competes strategically with domestic producer of generic remedies in presence of competitive producers of falsified authentic remedies. Three approaches to combating of counterfeits are considered: quality control; mandatary labeling and internal regulation via full or partial state-ownership in the capital of domestic producer of generic remedies. It was demonstrated that all three instruments reduce the share of falsified authentic remedies but stricter quality control as well as mandatory labeling may nevertheless bring an increase in the volume of falsified remedies' sales. Internal regulation via increased state ownership in domestic firm always decreases both the share and the volume of falsified remedies' sales and improves national welfare. The impact of stricter quality control and introduction of mandatory labeling on national welfare is ambiguous and depends on quality preferences: these policies improve welfare in case of high quality valuation and reduce welfare otherwise.

Keywords: falsified remedies; strategic competition; welfare; anti-counterfeiting policy (search for similar items in EconPapers)
JEL-codes: D43 L51 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2025:i:66:p:159-176

DOI: 10.31737/22212264_2025_1_159-176

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