Economics

Recently Mylan has been in the news for its steep increase in the price of EpiPen’s. (Please see information below.) It is estimated that Mylan currently controls 90% of the epinephrine auto-injector market with the EpiPen. There is currently only one other competitor in this market. 1) Calculate the Herfindahl-Hirschman Index for the epinephrine market and discuss what this means for the industry and for the ability of Mylan to increase the price of EpiPen so quickly? 2) Discuss pricing methods Mylan has used to increase company profits from sales of its EpiPen with the introduction of its new generic product. Explain how profit is increased for Mylan. 3) Explain why some consumers may be harmed and others made better off with introduction of Mylan’s generic product. 4) Do you think entry of competing products like Auvi-Q will limit the pricing options of Mylan? Explain why or why not. Explain how this relates to firm profitability and what steps Mylan might take to preserve its profit.