Proof of Proposition. 4. The first part follows directly from the subgame Γ1,G (see payoffs given in figure 1). After loosing to G1, brand would launch a generic if ΠT1 + ΠT1 − θ + δ(ΠT1 + ΠT1) ≥ 0 0 ΠD0 +δΠT0. Rearranging the terms gives the required result θ ≤ (ΠT1 +ΠT0 −ΠD0)+δ·(ΠT1 +ΠT1 − 0 ΠT0) = θ∗∗(κ). Similarly, the second part follows from the subgame Γ1,B. After winning against 0 G1, the brand launches a generic in post-patent period if ΠM + δ(ΠT1 + ΠT1 − θ) ≥ ΠM + δ(ΠT0). Rearranging gives the required result θ ≤ (ΠT1 + ΠT1 − ΠT0) = θ∗(κ). Q Appendix C. Extension to the Game Tree 0 2
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