ECON 101 Lecture Notes - Lecture 5: Joseph Schumpeter, Fixed Cost, Bertrand Competition

• School: U of M
• Department: Economics
• Course: ECON 101
• Professor: William James Adams

Document Summary

Many number of irms produce diferent raw products. Wholesalers sell medicine over the counter and by doctor"s prescriptions. Doctor choose the medication (not the consumer). Those who choose do not pay, those who pay do not consume, those who consume do not pay and choose. Not all drugs are substitutes for one another: categorical / therapeutical class. Branded drugs vs generic drugs. (close substitutes, high cped) Very very large, global geographic market because weight to product value is low. (compare to that of milk and beer) However, medicinal products is strictly managed by the government: diferent countries have diferent laws and legislations, certain drugs are prohibited in a country even if it is very portable. Seller concentration is low because the industry is highly specialized. However, if we look at the relevant therapeutical concentration, it is pretty high. History of the pharmaceutical industry: science, regulation safety, regulation is intellectual property, regulation of advertising, funding and research.