ies. A company called Celltech received a very broad patent in 1989 on monoclonal antibodies. Another company, Genetech, initiated a proceeding at the U.S. Patent and Trademark Office [PTO] claiming that it had invented the technology. The PTO found for Genentech. Subsequently, the two companies entered into a confidential settlement that resulted in a federal district court ordering on March 16, 2001, that the PTO should revoke Celltech's patent, which was scheduled to expire in 2006 and issue a new patent to Genentech, with an expiration of 2018. Thus, the government granted monopoly, the patent on monoclonal antibodies that would and should have expired in 2006 will be extended to 2018 meaning no other company can use the patented technology to create these antibodies (Stix, 2004).
Market structure is a set of market characteristics such as number of firms, easy of entry into a particular business or market, and barriers to entry for new firms such as high start up costs. Economists principally characterize market structure by the number of firms. If there is just one firm in the market, it is a monopoly. In contrast, perfect competition is characterized by:
Individual firms controlling relatively small market share
The fact that individual companies cannot affect prices
The free entry of firms into a market
Arguably, the most straightforward deviation from perfect competition occurs when there are a relatively small number of firms operating in an industry. At the extreme, one firm produces for the entire market in which case the firm is referred to as a monopoly (Imperfections and Distortions Defined, online). Because of the lack of competition, monopoly firms will make an economic profit. This would normally cause other firms to enter the market. For this market to remain monopoly, there must be one or more barriers to entry for new firms. Barriers to entry are the technical, financial and legal restrictio...