Wellness Pharmaceuticals and the Technological Monopoly on Lexabuzac

What type of monopoly does Wellness Pharmaceuticals most likely have on their new antidepressant, Lexabuzac?

a. Natural Monopoly

b. De facto Monopoly

c. Government Monopoly

d. Technological Monopoly

Answer:

The type of monopoly Wellness Pharmaceuticals has on the new antidepressant, Lexabuzac, is most likely a technological monopoly.

Monopoly, as described by Irving Fisher, is a market with the absence of competition, creating a situation where a specific person or company is the only supplier of a particular thing. This contrasts with a monopsony, which relates to a single entity's control of a market to purchase a good or service, and with oligopoly and duopoly, which consist of a few sellers dominating a market.

Monopolies are characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the possibility of a high monopoly price well above the seller's marginal cost that leads to a high monopoly profit.

When a pharmaceutical company like Wellness Pharmaceuticals develops and releases a new drug like Lexabuzac, it holds what is known as a pharmaceutical or drug patent. This is a form of technological monopoly. The patent rights give the company exclusive control over the production of the drug for a set period of time, allowing it to be the sole producer and earn profits without direct competition.