Payoffs with two challengers Sample Clauses

Payoffs with two challengers. We selected values of parameters β, γ, α1 and λ and normal- ized constant marginal costs to zero to compare equilibrium outcomes (prices, quantities, profits) for different values of κ and J. The first three panels of Figure (5) show outcomes in a competitive triopoly T0 when J = 2 in any given period (here we only show outcomes in period one and results with general case of J > 2 and sum over the two periods are given later). These are plotted as functions of κ ∈ [0, 1], our parametrization of relative first mover advantage for the first generic.19 Figure 5. Non-Collusive Triopoly and Duopoly Since κ measures the relative first mover advantage by changing the WTP of these drugs, but not that of the branded drug, prices, quantities or profits of the latter firm do not vary over κ. For generic 1 (if it is the first entrant), as κ increases, prices, quantities and profits increase while for generic 2 (if it is the second entrant) they decrease. At κ = 0, neither of the generics have an advantage over the other, and hence at this value, prices, quantities and profits of the two generics are equal to each other. Since by construction, the total size of the generic market is fixed and set equal to the branded market (a(T) + a(T) = λa(T), λ = 1), a generic firm’s output and profits become
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