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Pharmaceutical M&A Activity: Effects On Prices, Innovation, And Competition, Barak D. Richman, Will Mitchell, Elena Vidal, Kevin Schulman
Pharmaceutical M&A Activity: Effects On Prices, Innovation, And Competition, Barak D. Richman, Will Mitchell, Elena Vidal, Kevin Schulman
Faculty Scholarship
The rise of blockbuster pharmaceutical acquisitions has prompted fears that unprecedented market concentration will weaken competition. Two of the most prominent concerns focus on the upstream and downstream ends of the pharmaceutical industry: (1) the concern that these mergers will concentrate the market for discovery and will therefore lead to fewer discoveries; and (2) the concern that merging large marketing, sales, and distribution forces will strengthen the hands of select pharmaceutical manufacturers and weaken downstream competition. Having considered potential dynamic effects in the industry and conducted a series of preliminary interviews with knowledgeable observers, though, this Article argues that neither …
Churn, Baby, Churn: Strategic Dynamics Among Dominant And Fringe Firms In A Segmented Industry, John M. De Figueiredo, Brian S. Silverman
Churn, Baby, Churn: Strategic Dynamics Among Dominant And Fringe Firms In A Segmented Industry, John M. De Figueiredo, Brian S. Silverman
Faculty Scholarship
This paper integrates and extends the literatures on industry evolution and dominant firms to develop a dynamic theory of dominant and fringe competitive interaction in a segmented industry. It argues that a dominant firm, seeing contraction of growth in its current segment(s), enters new segments in which it can exploit its technological strengths, but that are sufficiently distant to avoid cannibalization. The dominant firm acts as a low-cost Stackelberg leader, driving down prices and triggering a sales takeoff in the new segment. We identify a “churn” effect associated with dominant firm entry: fringe firms that precede the dominant firm into …