Due to patents, Pfizer and other companies in the pharmaceutical industry do not always compete with a monopolist. When a company owns a patent, it is the only manufacturer that can make the product until it expires. It is therefore clear that the company can act as a monopoly while controlling the patent. As a monopoly, the company has market power, which gives it the ability to adjust the price of a good in the market. The main goal of a monopolist and business owner is to maximize their profits, however, there are rules they must follow. Monopolistic firms still have to follow the market demand curve. When they decide to produce will depend on their own levels of income, risk and effort. The company also needs to know the price elasticity of the curve: the greater the price elasticity, the more difficult it will be for a company like Pfizer to establish high prices and volumes. Although monopolies sometimes seem harmful, there are arguments that they are a benefit to society. Pharmaceutical industry monopolies push companies to continue their research and development (R&D) efforts to obtain new patents. According to a 1992 study, among 24 U.S. The industrial groups, pharmaceuticals, devoted 16.6% of their amounts to fundamental research, while all other industries devoted an average of 5.3% (Sherer 1307). This fact confirms the incentive for pharmaceutical companies to obtain a patent and gain more power. Pfizer encourages R&D because of the incentives and desire to obtain patents to obtain more profits. Pfizer must promote itself to succeed, by creating a good brand image that consumers will trust. If the company can advertise successfully, more consumers will buy...paper...necessarily in a true or honest way. To illustrate this point, in 1995, 100% of all PBM profits came directly from their regular sales and business practices. Six years later, in 2001, the majority of their revenue came from services to pharmaceutical companies (Martinez). This shows a definitive change in the conduct of PBMs. Works Cited Castellblanch, Ramon “Selling Out Seniors to Protect Pharmaceutical Profits” The HartfordCourant. Goozner, Merrill. The 800 million dollar pill. Berkley: University of California, 2004. Print. Freudenheim, Milt “Influencing Doctor's Orders” New York Times. “Off the Charts: Pharmaceutical Company Salaries, Profits and Expenses.” » Families USA, July 2001.Web. April 21, 2014. Martinez, Barbara “Companies Paid to Reduce Drug Costs Also Work for Drugmakers” The Wall StreetJournal.Scherer, FM Handbook of Health Economics. Ch..25