Patents create a monopoly because only one company or individual can produce a product. This prevents other manufacturers from entering the market. This concept is particularly restrictive when the demand for the product is inelastic; if the product has no substitutes the monopolistic producer is able to set a price that may not be affordable for the consumer. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay When the patent expires, other manufacturers can freely enter and exit the market, this creates competition within the market. Substitute products are now available to the consumer and the market can naturally set an equilibrium price. The pharmaceutical industry is a great example of this concept. When a drug is placed on the market with a patent, only one company is able to produce it. If this drug is necessary for the consumer, his demand is inelastic and he must pay the price set by the company. Once the patent expires, the drugs may become available in generic form. If the original patent owner gets compensation for the delay, even if these are sometimes shut down by the US court system, the company will continue to produce the drug as a monopoly. These late payment strategies have a negative effect on consumers because the market cannot reach an equilibrium price; consumers are forced to pay for a product they cannot afford. The monopolistic company is taking advantage of inelastic consumer demand for the drug and exploiting consumers who need a product. Please note: this is just an example. Get a custom paper from our expert writers now. Get a custom essay In my opinion this pay off strategy should be banned. It creates a system that exploits the sick and elderly and prevents the healthcare sector from progressing. Drugs should be widely available and keeping the price high is unethical. Drugs should be priced at equilibrium just like many other goods that consumers need on a daily basis. Pharmaceuticals are not luxury goods, and the U.S. economy should not treat them as such.