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tent for No Smak. A potential new drug, NoSmak, cures lip smacking with one dose, but research and development ould cost $70 million. The monopoly profit (earned while a single firm produces the product) will be $10 million per yea ter a patent expires, the original developer of the drug will have sufficient brand loyalty to earn $1 million per year for other 10 years. What is the shortest patent length required to induce a firm to develop the drug?

tent for No Smak. A potential new drug, NoSmak, cures lip smacking with one dose, but research and development ould cost $70 million. The monopoly profit (earned while a single firm produces the product) will be $10 million per yea ter a patent expires, the original developer of the drug will have sufficient brand loyalty to earn $1 million per year for other 10 years. What is the shortest patent length required to induce a firm to develop the drug?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
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Patent for No Smak. A potential new drug, NoSmak, cures lip smacking with one dose, but research and development would cost $70 million. The monopoly profit (earned while a single firm produces the product) will be $10 million per year. After a patent expires, the original developer of the drug will have sufficient brand loyalty to earn $1 million per year for another 10 years. What is the shortest patent length required to induce a firm to develop the drug?
Transcribed Image Text:Patent for No Smak. A potential new drug, NoSmak, cures lip smacking with one dose, but research and development would cost $70 million. The monopoly profit (earned while a single firm produces the product) will be $10 million per year. After a patent expires, the original developer of the drug will have sufficient brand loyalty to earn $1 million per year for another 10 years. What is the shortest patent length required to induce a firm to develop the drug?
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