Anti-Competitive Impact of Pseudo-Generics |
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Authors: | Vasco Rodrigues Ricardo Gonçalves Hélder Vasconcelos |
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Affiliation: | 1. Centro de Estudos de Economia e Gest?o, Faculdade de Economia e Gest?o, Universidade Católica Portuguesa, Rua Diogo Botelho, 1327, 4169-005, Porto, Portugal 2. Faculdade de Economia, Universidade do Porto, Rua Dr. Roberto Frias, 4200-464, Porto, Portugal
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Abstract: | In pharmaceuticals markets, sellers of branded drugs sometimes sell generic versions of their own branded products, either directly or through license agreements. Although claims that these pseudo-generics may have anti-competitive effects are not unusual, the theoretical literature on this issue is limited and not conclusive. This paper uses a model that combines horizontal and vertical product differentiation, to explain how those effects may occur. We show that the producer of the branded product will not sell the pseudo-generic unless faced with competition and that, if she does so, in some circumstances, all prices rise to the benefit of all sellers and the detriment of consumers. |
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