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Pharmaceutical Generics, Vertical Product Differentiation, and Public Policy

UPF Working Paper No. 662

23 Pages Posted: 3 Jun 2003  

Antonio Cabrales

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Date Written: January 2003

Abstract

This paper studies oligopolistic competition in off-patent pharmaceutical markets using a vertical product differentiation model. This model can explain the observation that countries with stronger regulations have smaller generic market shares. It can also explain the differences in observed regulatory regimes. Stronger regulation may be due to a higher proportion of production that is done by foreign firms. Finally, a closely related model can account for the observed increase in prices by patent owners after entry of generic producers.
differentiation

Keywords: Pharmaceutical industry, generics, vertical product

JEL Classification: I10, I18, L18, L65

Suggested Citation

Cabrales, Antonio, Pharmaceutical Generics, Vertical Product Differentiation, and Public Policy (January 2003). UPF Working Paper No. 662. Available at SSRN: https://ssrn.com/abstract=394941 or http://dx.doi.org/10.2139/ssrn.394941

Antonio Cabrales (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34-93) 542 27 65 (Phone)
(34-93) 542 17 46 (Fax)

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