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Does Misery Love Company? Evidence from Pharmaceutical Markets Before and After the Orphan Drug Act

Lichtenberg, Frank R and Waldfogel, Joel (2009) Does Misery Love Company? Evidence from Pharmaceutical Markets Before and After the Orphan Drug Act. Michigan Telecommunications and Technology Law Review, 15 (2). pp. 335-357. ISSN 1528-8625

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Abstract

When production entails fixed or sunk costs, the number of products developed can increase with the size of the market. A larger potential market provides greater reward for firms that can bring a new product to market. Additional products increase welfare because if products are differentiated, then additional products confer benefits by giving more consumers options that better suit their needs. In this way, consumers benefit each other via a mechanism one might term “preference externalities.” Of course, whether or not products are differentiated, additional products can place downward pressure on prices.

Item Type: Article
Uncontrolled Keywords: ResPubID17929
Subjects: FOR Classification > 1117 Public Health and Health Services
FOR Classification > 1402 Applied Economics
SEO Classification > 9204 Public Health (excl. Specific Population Health)
Faculty/School/Research Centre/Department > Centre for Strategic Economic Studies (CSES)
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Depositing User: VUIR
Date Deposited: 03 May 2012 01:36
Last Modified: 19 Mar 2015 01:10
URI: http://vuir.vu.edu.au/id/eprint/4422
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