Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/104324
Authors: 
Appelt, Silvia
Year of Publication: 
2010
Series/Report no.: 
Munich Discussion Paper 2010-23
Abstract: 
Patent holders frequently attempt to mitigate the loss of monopoly power by authorizing generic entry prior to patent expiry (early entry). Competition in off-patent pharmaceutical markets may be adversely affected if early entry substantially impairs the attractiveness of subsequent market entry. I examine generic entry decisions made in the course of recent patent expiries to quantify the impact of early entry on incentives for generic entry. Using unique micro data and accounting for the endogeneity of early entry, I estimate recursive bivariate probit models of entry. Drug markets' pre-entry revenues largely determine both independent generic entry and early entry decisions. Early entry in turn has no significant impact on the likelihood of generic entry. Original drug producers appear to authorize generic entry prior to loss of exclusivity primarily fueled by rent-seeking rather than strategic entry-deterrence motives.
Subjects: 
Generic Entry
Early Entry
Anticompetitive Practices
JEL: 
L41
I11
O34
C35
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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