1.What kind of economic structure (monopoly, oligopoly, pure competition, ) is the health care drug industry....

1.What kind of economic structure (monopoly, oligopoly, pure competition, ) is the health care drug industry. Explain why.
2.Do you think that companies should always charge what the market will bear (highest price) or should they base prices on 'ability to pay' (but still at a profit.)
3. Also, should the government set price limits in health care? Look for a more recent example related to today’s pricing and shortages of medical supplies.

Solutions

Expert Solution

1) The health care drug industry falls under oligopoly market structure as there is an easy entry and exit points into the market. There would be large number of sellers making the same drug but not everyone will have a good share or influence on the market. Products are differentiated but they are similar in its objectives.

In drug industry also the seller will be more but the seller with good market share are less. Drugs for a single disease is same but they are differentiated with price, size etc.

2) companies should charge what the people will be able to bear not everyone will be able to afford the market price. There are essential drugs which should be made affordable to everyone. So they should charge what the customer will be able to pay.

3) Yes there should be a price limit at what cost a drug can be sold because it is essential for the people and it should be affordable. There are instances where drug companies try to make money out of drugs which could cure deadly disease. So price limit is a must.

Rahul Sunny answered 1 month ago

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