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Pioneer firms can retain monopoly power by capitalizing on the brand loyalty and relatively inelastic demand of this group. In this scenario, the price insensitive ones are left. The pioneer took advantage of this market segmentation by raising brand name prices for its loyal customers. In fact, pioneers had the opportunity to introduce their own generic versions to compete in the generic segment...
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Price discrimination isn’t the only possible explanation for price differentials. Prices in some countries can be lower than others due to government regulations or their national health plan serves as a monopoly buyer. In context, it is the government that imposes price controls. They can also drive price as low as the marginal cost further increasing the price differential with the other competing country...
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Brand Loyalty
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