nep-ind New Economics Papers
on Industrial Organization
Issue of 2007‒06‒30
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Pre-empting Technology Competition Through Firm Acquisitions By Grimpe, Christoph; Hussinger, Katrin
  2. Market Effects of Generic Entry: The Role of Physicians and of Non-Bioequivalent Competitors By Gonzalez, Jorge; Sismeiro, Catarina; Dutta, Shantanu; Stern, Philip
  3. The Private Costs of Patent Litigation By James Bessen; Michael J. Meurer

  1. By: Grimpe, Christoph; Hussinger, Katrin
    Abstract: This paper investigates the motive of pre-empting technology competition through mergers and acquisitions (M&A). Exploiting the patent application procedure at the European Patent Office we introduce a new measure for the possibility to create entry barriers in technology markets. Our results show significant evidence that firms engage in horizontal M&A to pre-empt competition in technology markets.
    Keywords: pre-empting technology competition, mergers and acquisitions
    JEL: G34 L20 O34
    Date: 2007
    URL: http://d.repec.org/n?u=RePEc:zbw:zewdip:5590&r=ind
  2. By: Gonzalez, Jorge; Sismeiro, Catarina; Dutta, Shantanu; Stern, Philip
    Abstract: Patent expiration represents a turning point for the brand losing patent protection as bioequivalent generic versions of the drug quickly enter the market at reduced prices. In this paper, we study how physician characteristics and their prescribing decisions impact the competition among molecules of a therapeutic class, once generic versions of one of these molecules enter the market. Specifically, we study the evolution of the Selective Serotonine Reuptake Inhibitors (SSRIs) after the introduction of generic versions of fluoxetine (brand name Prozac) in the United Kingdom (UK). Our results suggest that, to fully understand the market evolution after generic entry, public health officials need to consider the marketing activities of pharmaceutical companies and determine how (1) individual physicians prescribe all competing drugs, and (2) respond to drug prices and marketing actions. For example, we find that a group of physicians sensitive to detailing switch from fluoxetine to non-bioequivalent branded alternatives after patent expiration, as Prozac significantly reduces its marketing support. Consequently, the market share of fluoxetine decreases despite being available at significant price discount under generic form, and despite the increase of prescriptions by price-sensitive physicians. Hence, governments interested in assessing generics diffusion should consider the prescribing across all competitors, whether or not bioequivalent, and determine the size of physician segments sensitive to pharmaceutical marketing activity and prices.
    JEL: I1 H51 C50 M31 C11
    Date: 2006–10
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:3717&r=ind
  3. By: James Bessen (Research on Innovation, Boston University School of Law); Michael J. Meurer
    Abstract: This paper estimates the total cost of patent litigation to alleged infringers. We use a large sample of stock market event studies around the date of lawsuit filings for US public firms from 1984-99. We find that the total costs of litigation are much greater than legal fees and costs are large even for lawsuits that settle. Lawsuits cost alleged infringers about $28.7 million ($92) in the mean and $2.9 million in the median. Moreover, infringement risk rose sharply during the late 1990s to over 14% of R&D spending. Small firms have lower risk relative to R&D.
    Date: 2007
    URL: http://d.repec.org/n?u=RePEc:roi:wpaper:0701&r=ind

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