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

Number of Pages

55

Components of Thesis

1 pdf

Open Access

Available to all.

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