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  • Monopoly Drugs vs. Generic Drugs

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    Dipal Prajapati
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    When a drug patent expires, the market shifts from a monopolistic to a competitive market. Under a monopoly, the drug company sets the price where marginal revenue equals marginal cost to maximize profits. After the patent expires, generic drug companies can produce the drug, increasing competition and driving prices down from the monopoly level. The document discusses how drug prices are determined differently under monopoly versus competitive market conditions using pharmaceuticals as an example.

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    Monopoly Drugs

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    When a drug patent expires, the market shifts from a monopolistic to a competitive market. Under a monopoly, the drug company sets the price where marginal revenue equals marginal cost to maximize profits. After the patent expires, generic drug companies can produce the drug, increasing competition and driving prices down from the monopoly level. The document discusses how drug prices are determined differently under monopoly versus competitive market conditions using pharmaceuticals as an example.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
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    Download as ppt, pdf, or txt
    32 views8 pages

    Monopoly Drugs vs. Generic Drugs

    Uploaded by

    Dipal Prajapati
    When a drug patent expires, the market shifts from a monopolistic to a competitive market. Under a monopoly, the drug company sets the price where marginal revenue equals marginal cost to maximize profits. After the patent expires, generic drug companies can produce the drug, increasing competition and driving prices down from the monopoly level. The document discusses how drug prices are determined differently under monopoly versus competitive market conditions using pharmaceuticals as an example.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    of 8

    MONOPOLY DRUGS

    Vs.
    GENERIC DRUGS

    Presented by:
    Mayur Pathar
     Prices are determined differently in
    Monopolized market and Competitive
    market

     Ex.Pharmaceutical drugs
     Firm discover a New drug
    patent laws

    Monopoly

    Sell the drugs


    Firm’s patent runs out

    Any company make and sell drug

    Market switches from monopolistic to


    competitive
     What should happen to the price of a
    drug when the patent runs out?
    The Market for Drugs
     Marginal cost of producing drugs is
    constant.
     During life of patent monopoly firm
    maximize the profit.
     Marginal revenue=marginal cost

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