A dynamic oligopoly structural model for the prescription drug market after patent expiration

Andrew T. Ching

Research output: Contribution to journalArticle

Abstract

This article incorporates consumer learning and heterogeneity into a dynamic oligopoly model for the prescription drug market. In the model, both firms and patients need to learn the generic qualities via patients' experiences, generic firms' entry decisions are endogenous, but their entry timings depend on a random approval process. I apply the model to examine the impact of shortening the expected generic approval time. Although this policy experiment brings generics to the market sooner, it increases a potential entrant's likelihood of entering a crowded market and hence could reduce the total number of generic entrants and consumer welfare.

Original languageEnglish (US)
Pages (from-to)1175-1207
Number of pages33
JournalInternational Economic Review
Volume51
Issue number4
DOIs
StatePublished - Nov 1 2010

ASJC Scopus subject areas

  • Economics and Econometrics

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