Department or Program
Economics
Abstract
While very few individuals question the validity and necessity of the patent system, the temporary monopolies imposed by patents necessarily reduce access to medication. This becomes especially problematic when dealing with issues of public ordre, such as the aids crisis in the last 30 years. Compulsory licensing, or the power for a government to void a patent and allow a non-patent holder to produce a patented good, aims to remedy this problem. Governments have the ability to issue these in times of epidemics, or other issues of rampant illness. However, even though these licenses are completely legal, pharmaceutical companies meet them with hostility. The companies worry about their misuse and the effect on their business. This thesis aims to calculate, through the use of an event study, whether these fears are warranted. I look at the stock performance in the period following the license to see if there are statistically significant abnormal returns when compared with their expected performance. Examining company performance in the period following a license, the vast majority of event studies I ran did not prove to have statistically significant abnormal returns. In fact, of all the event studies I ran, only one showed significance, but that was lost when looking at the performance over a more extended period of time. Overall, my research shows that the issuance of a compulsory license does not have a predictable significant effect on stock performance.
Level of Access
Open Access
First Advisor
Hughes, James
Date of Graduation
Spring 5-2015
Degree Name
Bachelor of Science
Recommended Citation
Mansuri, Daniel E. Mr., "Compulsory Licenses: Damaging Firm Value in the Short Run?" (2015). Honors Theses. 141.
https://scarab.bates.edu/honorstheses/141
Number of Pages
55
Components of Thesis
1 pdf
Open Access
Available to all.