Question

In 1993, Pharmaceuticals of Stamford, Conn. applied for the first in a series of patents on Oxycontin, a painkiller. The U.S. Patent and Trademark Office (PTO) granted those patents based on the manufacturer's contention that the drug contained a novel innovation: It had been engineered so that only a very small dose was required for the drug to be effective for 90 percent of patients. Seven years later, a generic drug maker, Endo Pharmaceuticals, applied to the FDA for permission to sell its own, lower-priced version of Oxycontin. Their patents acted as a(n) _____ and prevented Endo from entering the market.

Answer 1

Barrier to entry

Explanations: Patents act as barriers to entry by preventing entry of new firms int he market.