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Market Definition and Competition Policy Enforcement in the Pharmaceutical Industry

Georges Siotis, Carmine Ornaghi and Micael Castanheira ()

No 2020-49, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: We focus on market definition in the pharmaceutical industry, where the introduction of generics in different markets provide a sequence of quasi natural experiments involving a significant competitive shock for the molecule experiencing Loss of Exclusivity. We show that generic entry alters competitive constraints and generates market-wide effects. Paradoxically, entry may soften competitive pressure for some originators. We obtain these results by econometrically estimating time-varying price elasticities and apply the logic of the Hypothetical Monopolist Test to delineate antitrust markets. They provide strong empirical support to the approach consisting in defining relevant markets contingent on the theory of harm. We discuss the relevance of these findings in the context of ongoing cases.

Keywords: market definition; competition policy; antitrust; pharmaceutical industry (search for similar items in EconPapers)
JEL-codes: D22 I11 L13 (search for similar items in EconPapers)
Pages: 34 p.
Date: 2020-12
New Economics Papers: this item is included in nep-com, nep-hea, nep-ind and nep-reg
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