Pseudo-Generic Products and Mergers in Pharmaceutical Markets
Laurent Granier () and
Cahiers du LASER (LASER Working Papers) from LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1
This paper fills the gap in the theoretical literature concerning mergers between brand-name and generic laboratories in pharmaceutical markets. To prevent generic firms from increasing their market share, some brand-name furms produce generics themselves, called pseudo-generics, enabling them to set up barriers to entry. We develop this topic by considering the pseudo-generics production as a mergers.catalyst. We show, in a duopoly model with substitutable goods, in which a brand-name firm and a generic firm compete à la Cournot, that a brand-name company always has an incentive to purchase its competitor. The key insight of this paper is that the brand-name laboratory can increase its merger gain by producing pseudo-generics beforehand. In some cases, pseudo-generics would not otherwise be produced.
Keywords: Mergers; Pharmaceutical Market; Pseudo-Generics. (search for similar items in EconPapers)
JEL-codes: I11 L12 (search for similar items in EconPapers)
Pages: 29 pages
New Economics Papers: this item is included in nep-com, nep-cse and nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:mop:lasrwp:2006.18
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