Mergers and Barriers to Entry In Pharmaceutical Markets
Laurent Granier and
S. Trinquard
Cahiers du LASER (LASER Working Papers) from LASER (Laboratoire de Science Economique de Richter), Faculty of Economics, University of Montpellier 1
Abstract:
After patent expirations in pharmaceutical markets, brand-name laboratories are threatened by generic firms'entry. To fill the gap in the theoretical literature on this topic, we study brand-name .rms.incentives either to deter entry, or to merge with the entrant. These strategies are considered along with the possibility of the brandname firm producing its own generic drug, called a pseudo-generic drug. Using a vertical differentiation model with Bertrand-Stackelberg competition, we show that each strategy, merging and deterring entry, may be Nash equilibrium, according to the generic firm's setup cost level and to the rate of discount.
Keywords: barriers; endogenous mergers; limit pricing; pharmaceuticals; pseudo- (search for similar items in EconPapers)
JEL-codes: I11 L12 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2007
New Economics Papers: this item is included in nep-com, nep-ind, nep-mic and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:mop:lasrwp:2007.21
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