What is the definition of "Market Failure"?
Specifically, is the following Market Failure or something else?
Consider a pharmaceutical company which develops a drug after the
expenditure of say $1 billion and is able to produce a daily dose for 50 cents.
The company considers the volume to be sold and realizes that it must get,
say, $5.00 per pill to make a profit. The formula for the pill is public.
Without a patent on the drug it can't sell for $5.00, so it needs patent
protection to be profitable.
Is the need for patent protection "market failure" or is that something else?
If something else, what is that called?
Gene
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