StudySoupNotes Econ 101
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This 1 page Study Guide was uploaded by Miranda Hansen on Tuesday February 10, 2015. The Study Guide belongs to Econ 101 at Washington State University taught by Dr. Alan Love in Fall. Since its upload, it has received 81 views. For similar materials see Micro Economics in Economcs at Washington State University.
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Date Created: 02/10/15
Dr Alan Love Miranda Hansen 11162014 In Class Notes Patents and Pay for Delay A patent creates a kind of monopoly because it allows one company to have a massive advantage over the market A company that can be considered a monopoly is any company that is offering a product that has no close substitutes A patent protects a certain technology which in essence makes it illegal to produce copies 0 Therefore much more difficult to create substitutes Patents affect consumers in that they tend to increase the price of the product 0 They can be expensive and difficult to obtain as well as the aforementioned fact that they naturally exclude substitutes that may be cheaper In a market where patent protection for a technology runs out one can expect there to be a large number of new company s entering the market 0 Each offering up their own product to fill the demand 0 They previously may have been unable to offer it due to intellectual infringement and copyright or the original product having dominance over the market The expiration of a patent effects consumers in a positive way because it tends to lower the price of a product due to the sudden competition in the market Pay for delay or the practice of big pharmaceutical companies paying generic brands to keep their cheaper substitute products off the market is beneficial to both producers 0 It allows the new company a ensured profit while allowing the big company to monopolize the market without any competition However the practice is very detrimental to the consumers 0 Oftentimes the company being bribed to keep their product off the market would be able to offer their medication for as little as a 1 10 of the price 0 In this specific market this dichotomy can be the difference between life and death for consumers that cannot afford the more expensive medication
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