The pharmaceutical industry operates in an aggressively competitive market. There are a limited number of firms in the industry. This is due primarily to the high fixed cost of entering the market, the high cost of research and development, obtaining patents and dealing with mergers and acquisitions. Let us assume that over 70% of the products sold in this market are protected by patents for the next eight years.

Identify and describe the market characteristics of oligopoly.

Explain price competition in oligopoly.

Explain the barriers to entry in monopoly and oligopoly.

Does this pharmaceutical industry conform to an economist’s definition of an oligopoly? Justify your response.

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Solution of all parts Answer 1 The market characteristics of oligopoly are a the industry is dominat... View the full answer