Danilo Villegas Industry research completion | � PAGE \* MERGEFORMAT �1�
Industry research completion
Danilo Villegas
Axia College of University of Phoenix
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The pharmacy market is among the industries that have a tremendous impact on the economy and the well-being of the population of our country. Pharmacies are active in the market for drugs. This market has special characteristics which make it so different from other markets; for instance, patients or final consumers are not completely responsible for the choices they made because they have been advised by their primary care physicians to take a drug or combination of medicines. (Study of regulatory restrictions in the field of pharmacies, 2008)
The fact that consumers can prevent another people from using the drugs and diminishing another person's ability to use it makes this a resource that is both rival and excludable; another important characteristic of this market is that consumers often do not cover the cost of the drugs themselves but are relying on health insurance or government assistance.
The illustration that accompanied Marshall's origi...
Perfectly inelastic demand
Perfectly elastic demand(Study of regulatory restrictions in the field of pharmacies, 2008)
The drug market is prone to so many market failures that has forced the government to intervene heavily at all levels of the supply chain; some of the positive consequences of government intervention are accessibility, price and quality of medicines.
The drug market is characterized by high investment in research and development of new drugs, which are protected by intellectual property rights; in order for a manufacturer to attain a profitable level in the drug market the medicines are protected by patents which restricts competitors from free riding on the inventors discovery; however patents impose entry barriers that creates a natural but temporary monopoly for the drug producers. This monopoly leads to inefficient price levels, which in some countries the price...