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* the combinations of the factors above will put pressure on the pharmaceutical companies to expand geographically as quickly as possible, in order to maximize their chances of recovering their R&D costs and making a fair profit within the time period covered by patent protection. In order to do that, they will accept in some countries prices that are far from ideal -- prices they would never accept in a true monopoly situation. In doing so, they open the gates for grey trade -- re-importation and parallel imports. At an annual treatment cost of 10,000 USD, and the same drug is sold in Canada at a price 10% lower, then re-importation is likely to occur. In the absence of trade tariffs and with a transportation cost of maximum 2%, a grey trader has an 8% trading margin to cover selling & operational costs and retain a profit. The product is likely to have been kept in Canada in the same conditions as required by U.S. laws (e.g. temperature controlled and recorded the entire time, etc.). Therefore a U.S. pharmacy can safely buy it and sell it forward to its patients.
* the barrier to grey trade is formed by the combination of several factors:
* Price difference
* Trade Tariffs (where applicable)
* Cost of transport
* Regulatory considerations
* There may be a further limitation regarding reimbursement -- e.g. If the U.S. government only reimburses to
Monopoly Market Characteristics of Perfectly Competitive Industry A perfectly competitive market is characterized as the market in which the firms as well as the consumers are the price takers. A price taking producer implies to the producer whose actions and decisions are not affected by the market forces but are only affected by the choice of the consumers. Similarly a price taking consumer refers to the consumers whose preferences are not homogenous
Prevent Competitive Markets in the United States The United States follows a system of "free market economy" in which most businesses are privately owned and where individual producers and consumers determine the kinds of goods and services produced as well as the prices of such products. Competition is a key factor in market economies as it keeps the prices of products in check, forces the competitors to enhance the efficiency
Healthcare Administration In a perfectly competitive market, the following will occur in response to different changes in the market. A decrease in the wage of clinic-based nurses will cause a reduction in the cost for nurses. This will result in a decline in the price of physician services, because the price decrease is going to be passed onto the consumer. The output of physician services will not change as the cost declines,
You can also examine the variable costs; these would be the costs that move up and down during the manufacturing process (such as raw material costs and labor costs). When a firm reduces their overall costs, this would increase their overall marginal revenues, by increasing the profits that they are making on each unit. The point when costs have been reduced as much as possible is when a firm
Firm loss why a firm operate experiencing a loss. Explain law diminishing returns economics. Give a personal diminishing utility. Give summary economic costs. In short-run, a firm operates a loss. How McDonald's operate a competitive market. Why would a firm still operate when they are experiencing a loss? Logically speaking, it might seem intuitive that a firm would not wish to continue to operate within a given market if it was experiencing
competitive market environment that Victorian Diary Giant operates by answering four questions in the case. Victorian Diary operates under the perfect competitive market. In the last few years, the firm has cut the milk prices by 8.5% making the new price to move to $4.50 per kilogram leaving farmers at break-even level because of the glut of the milk in the world markets. While 8.5% cut of price is