Entry deterrence and antibiotic conservation under post-entry Bertrand competition
General Economics
2025-12-08 v1 Economics
Abstract
We analyze how an incumbent antibiotic monopolist responds to the threat of post-entry Bertrand competition by a vertically differentiated rival. In a two-period model where current production drives future resistance, Bertrand competition leads to a winner-take-all outcome. We find that strategic deterrence is optimal regardless of bacterial cross-resistance to prospective rival drugs. In contrast with post-entry Cournot competition, anticipated price competition provides the incumbent with a stronger strategic incentive for conservation.
Cite
@article{arxiv.2512.05261,
title = {Entry deterrence and antibiotic conservation under post-entry Bertrand competition},
author = {Roberto Mazzoleni and Hamza Virk},
journal= {arXiv preprint arXiv:2512.05261},
year = {2025}
}