Generic entry, price competition, and market segmentation in the prescription drug market – A comment

Izabela Jelovac ()
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Izabela Jelovac: GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne - EM - EMLyon Business School - CNRS - Centre National de la Recherche Scientifique

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Abstract: In this note, we revise the theoretical condition in Regan (2008) under which the price of brand-name drugs increases with the number of generic competitors—a phenomenon known as the generic paradox. We show that this condition derives from the analysis of an interior solution while it actually excludes the existence of an interior solution. Therefore, the theoretical result in Regan (2008) arises from an internal inconsistency.

Keywords: Generic entry; Price competition; Market segmentation (search for similar items in EconPapers)
Date: 2025-11-20
New Economics Papers: this item is included in nep-com and nep-hea
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Published in International Journal of Industrial Organization, 2025, 104, pp.103218. ⟨10.1016/j.ijindorg.2025.103218⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05375917

DOI: 10.1016/j.ijindorg.2025.103218

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