Competition between Brand-Name and Generics - Analysis on Pricing of Brand-Name Pharmaceutical
Health Economics , 18(5), 2009, pp. 591-606
Abstract: The objective of this paper is to provide two-stage game models explaining the 'Generic Competition Paradox' that demonstrates an increase of brand-name drug price in response to generic entry. Under the assumption that there are two groups of consumers who are segmented by their insurance status, high insurance coverage and low insurance coverage consumers, the models indicate that the decisive factor is the market share of the high insurance coverage consumer and the size of cross-substitute factor relative to certain characteristics of market demand. The paper analyses both the case of only true generic entry and the case of pseudo-generic and true generic entry. The models prove that a brand-name price will increase when both the market share of high insurance coverage consumer and the factor of cross-substitute are small. Also, the 'Generic Competition Paradox' more likely occurs in the market where less pseudo-generic products are produced.
[go to paper]

Can Health Insurance Explain Generic Competition Paradox?
(with I. Ferrara)
Economics Letters , 101(1), 2008, pp. 48-52
Abstract: In the context of a three-stage model with consumers differing in their health insurance coverage, the paper shows that there exist conditions under which the price of brand-name drugs increases following the entry of generic drugs.
[go to paper]

Introducing Social Investors into Multi-Agent Models of Financial Markets
(with S. Chen and B. Spotton-Visano)
Advances in Applied Artificial Intelligence: Lecture Notes in Computer Science , 4031, 2006, pp. 109-123
Abstract: Existing models of financial market prices typically assume that investors are informed with economic data and that wealth maximization motivates them. This paper considers the social dimensions of investing and the effect that this additional motivation has on the evolution of prices in a multi-agent model of an equity market. Agents in this model represent both economically informed investors and socially motivated investors who base their decision to invest solely on the popularity of the investment activity itself. The new model captures in a primitive but important way the notion of frenzy associated with speculative manias and panics, and it offers further insight into such anomalies as market bubbles and crashes.
[go to paper]

Pseudo-generic Products and Barriers to Entry in Pharmaceutical Markets
(with J. Seldon)
Review of Industrial Organization , 25(1), 2004, pp. 71-86
Abstract: This paper examines incentives for brand-name pharmaceutical producers to market pseudo-generic versions of their own branded products upon the expiry of patent protection. Using a two-stage game model, we determine that under plausible demand and cost conditions, brand-name incumbents can find it profitable to produce pseudo-generics as a means of blocking rivals' entry even when independent firms producing true generics face low entry costs. The model shows that social welfare can be higher when firms use pseudo-generics instead of capacity for entry deterrence as long as substitutability between brand-name and generic products is sufficiently high.
[go to paper]