Intellectual Property and Marketing

47 Pages Posted: 4 Feb 2008

See all articles by Darius N. Lakdawalla

Darius N. Lakdawalla

University of Southern California - Schaeffer Center for Health Policy and Economics; RAND Corporation; National Bureau of Economic Research (NBER)

Tomas Philipson

University of Chicago; National Bureau of Economic Research (NBER)

Richard Wang

Temple University

Multiple version iconThere are 2 versions of this paper

Date Written: December 2007

Abstract

Patents impose static costs by restricting price-competition, but may provide static benefits by promoting non-price competition. Competitive firms engage in inefficient levels of non-price competition, when this has external effects on competitors. For example, patent monopolies may market more efficiently than competitors. On balance, therefore, patent expiration may have smaller or even negative effects on static welfare. Empirically, we find pharmaceutical patent expirations lower output by 5 percent in the short-run, due to post-expiration reduction in marketing. In the long-run, expirations still raise output. However, the value of monopoly marketing to consumers - excluding value to firms - approximately covers its cost.

Suggested Citation

Lakdawalla, Darius N. and Philipson, Tomas J. and Wang, Y. Richard, Intellectual Property and Marketing (December 2007). Reg-Markets Center Working Paper No. 07-20. Available at SSRN: https://ssrn.com/abstract=1089045

Darius N. Lakdawalla (Contact Author)

University of Southern California - Schaeffer Center for Health Policy and Economics ( email )

635 Downey Way
Los Angeles, CA 90089-3333
United States

RAND Corporation ( email )

P.O. Box 2138
1700 Main Street
Santa Monica, CA 90407-2138
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Tomas J. Philipson

University of Chicago ( email )

Graduate School of Business
1101 East 58th Street
Chicago, 60637

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Y. Richard Wang

Temple University ( email )

Philadelphia, PA 19122
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
134
rank
170,297
Abstract Views
1,068
PlumX Metrics