the impact of market structure on wages fringe benefits and turnover this paper examines the relationship between labor compensation and the structure of the product market which is measured by the industry concentration ratio and by dummy variables for the existence and type of government regulation unlike previous studies that have estimated the impact of concentration and regulation on wages or earnings this study extends the analysis to include the effect of market structure on employer provided pensions and insurance and on voluntary labor turnover the hypothesis that product market power raises labor compensation is supported by empirical results indicating that concentration increases wages and fringes but lowers voluntary labor turnover regulations that set minimum prices and restrict entry raise labor compensation since wage premiums due to regulation are not offset by lower pensions and insurance or higher turnover other forms of regulation such as profit regulation in public utilities are found to reduce labor compensation as evidenced by higher turnover or lower wages and fringes or both

price regulation in the pharmaceutical industry prescription or placebo president clinton and several legislators have proposed restrictions on price increases in the pharmaceutical industry similar to those on some public utilities studies however suggest that under conditions of rapidly changing demand as found in pharmaceuticals price caps could be manipulated using simulations we show that in reaction to regulation pharmaceutical firms would optimally set launch prices 50 percent higher than in an unregulated market although initially hurt after seven years consumers benefit as the unregulated price rises above the price cap thus before enacting legislation congress should assess america s willingness to pay more now for lower prices in the future

direct estimation of synergy a new approach to the diversity performance debate this study examines the linkages between relatedness and synergy in the context of diversification among u s pharmaceutical firms for the period 1960 1980 rather than assume as in the entropy herfindahl and concentric indices of diversification that the levels of synergy generated by different related combinations of business units are identical we estimate synergy directly using a modified version of the concentric index in addition to estimating synergy using capital market performance of the firm as a whole we examine the effects of nondrug diversification on the innovative productivity of firms pharmaceutical divisions alone our two main findings are that production relatedness such as that between drugs and chemicals in fact did not imply synergy over the period of our study and that the patterns of synergy for different types of relatedness shifted over time with the industry life cycle

a new look at the returns and risks to pharmaceutical r d this study investigates the returns to r d for 100 new drugs introduced into the united states during the decade of the 1970s in contrast to prior studies it incorporates several significant structural changes that have occurred in the pharmaceutical industry during the 1980s these include higher real drug prices and a greater degree of generic competition a major finding is that the return on r d for the average new drug is approximately equal to the 9 percent industry cost of capital however the performance of new drugs introduced during the latter half of the 1970s was markedly better than that of early 1970s introductions this latter finding is consistent with the more rapid rate of industry growth in real r d expenditures the study also finds that the variation in returns is highly skewed with only the top 30 drugs covering mean r d costs on a fully allocated basis finally it is shown that real drug price increases in the 1980s were necessary for the average new drug introduction to recover its r d costs

drug prices and research and development investment behavior in the pharmaceutical industry abstract this paper argues theoretically and shows empirically that pharmaceutical r d spending increases with real drug prices after holding constant other determinants of research and development r d specifically an estimated elasticity suggests that a 10 percent increase in the growth of real drug prices is associated with nearly a 6 percent increase in the growth of r d intensity simulations that are based on our multiple regression model indicate that the capitalized value of pharmaceutical r d spending would have been about 30 percent lower if the federal government had limited the rate of growth in drug price increases to the rate of growth in the general consumer price index during the period 1980 2001 moreover the results suggest that a drug price control regime would have resulted in 330 65 fewer new drugs representing over one third of all actual new drug launches brought to the global market during that time period

productivity and distribution effects of codetermination in an efficient bargaining model codetermination can be regarded as an extreme regulatory intervention of the legislator in the labor market which might affect the efficiency of production and the bargaining power of labor based on a model that covers both efficient bargaining and employment bargaining a simple equation is derived that is suited to empirical testing the empirical test is based on german data and includes years before and after the extension of german codetermination law in 1976 the estimates determine the productivity of labor and relative bargaining power of capital and labor it turns out that codetermination does not affect productivity but leads to a significant increase in workers bargaining power and the distribution of rents

patenting in the shadow of competitors this article empirically examines the patenting behavior of new biotechnology firms that have different litigation costs i show that firms with high litigation costs are less likely to patent in subclasses with many other awards particularly those of firms with low litigation costs this pattern is consistent with the literature on costly litigation which suggests that firms that have high litigation costs will take greater precautions to avoid litigation these results are robust to a variety of control variables and modifications that seek to test alternative explanations

wage bargaining with time varying threats we study wage bargaining in which the union is uncertain about the firm s willingness to pay and threat payoffs vary over time strike payoffs change as replacement workers are hired as strikers find temporary jobs and as inventories or strike funds run out we find that bargaining outcomes are substantially altered if threat payoffs vary if dispute costs increase in the long run then dispute durations are longer settlement rates are lower and wages decline more slowly during the short run and may even increase the settlement wage is largely determined from the long run threat rather than the short run threat

a positive theory of environmental quality regulation this paper demonstrates that environmental quality regulation may enhance producer wealth while simultaneously reducing an externality problem by restricting access to common property regulation not only corrects a resource misallocation but it creates a scarcity rent as well in the recent history of environmental quality the common access problem has been addressed by federal and state agencies through a standards based approach rather than through the enforcement of tradable property rights as a consequence rents from the right to use these assets have accrued to producers the data are convincing that there is a strong interplay between producers consumers and the victims of pollution each party has some influence on the outcome and one sided analysis neglects many important aspects of regulation environmental quality regulation is complicated but many of the observed perplexities are consistent with a rent seeking self interest theory of government 46 references 1 figure 7 tables

monopoly plant and union effects on worker wages this paper examines the effects of industry concentration plant size and unionization on the wages of blue collar manufacturing workers the author points out that few previous wage studies have included all three of those variables or have employed data sufficiently detailed to test adequately their effect on wages this study using data primarily from the 1977 quality of employment survey demonstrates that concentration plant size and unionization all exercise significant and independent effects on wages

search intensity job advertising and efficiency this paper demonstrates that if both firms and workers search the other side of the market for job matches the equilibrium rate of unemployment is likely to be too high both sides ignore a positive externality of their search when they establish a job match they remove from the market a job searcher so they save society his search costs i show that there is no feasible wage rate that can internalize this externality under fairly weak restrictions on the technology of search

the effect of standardized information on firm survival and marketing strategies we argue that standardized information disclosure information using a common format and uniform metrics creates asymmetric opportunities for firms which affects their strategies and survival we test our predictions using a longitudinal quasi experimental field study involving the nutrition labeling and education act of 1990 nlea and we focus on firm market share within a category as a key asymmetry findings indicate that in general the nlea had no effect on firm responses however when accounting for firm differences we observe that the nlea led to 1 an increase in small share firm exits and 2 a greater increase in distribution for large share firms no concurrent increase in price by large share firms following the nlea was observed we conclude by discussing the implications of these effects for firm strategy the design of public policy and theories regarding the impact of information on markets

does public scientific research complement private investment in research and development in the pharmaceutical industry abstract this paper analyzes how pharmaceutical research and development r d investment responds to publicly supported biomedical research performed mainly at universities and nonprofit institutions new microlevel data on investment by the u s national institutes of health allow measures of public basic and clinical research in seven medical classes to be included in a distributed lag model explaining pharmaceutical r d investment using a panel of medical classes observed over 18 years the analysis found strong evidence that public basic and clinical research are complementary to pharmaceutical r d investment and thereby stimulate private industry investment however differences in the relevance and degree of scientific and market uncertainty between basic and clinical research lead to differences in the magnitude and timing of the pharmaceutical investment response

is public r d a complement or substitute for private r d a review of the econometric evidence is public r d spending complementary and thus additional to private r d spending or does it substitute for and tend to crowd out private r d conflicting answers are given to this question we survey the body of available econometric evidence accumulated over the past 35 years a framework for analysis of the problem is developed to help organize and summarize the findings of econometric studies based on time series and cross section data from various levels of aggregation laboratory firm industry country the findings overall are ambivalent and the existing literature as a whole is subject to the criticism that the nature of the experiment s that the investigators envisage is not adequately specified we conclude by offering suggestions for improving future empirical research on this issue

wage bargaining inventories and union legislation this paper analyses a strategic bargaining game where the firm may or may not be able to sell out of its inventory of finished goods during a strike firms and the union are both risk neutral and have the same discount rate it is shown that the wage equilibrium corresponds to the axiomatic nash bargaining solution where the threatpoints are the agents payoffs should bargaining continue indefinitely we use the 1980 and 1982 employment acts to test this theory interpreting that legislation change as changing the firm s threatpoint but not its bargaining power this allows us to identify the value of the firm s threatpoint post 1982 formal tests support the theory also consistent with the theory it is found that union wages decrease with inventories after 1982 but not before and that the union wage gap is smaller after 1982 wage bargaining as described in the strategic bargaining literature is a peaceful affair if there is no agreement workers simply withdraw their labour for one period and there is a consequent one period loss of production for the firm but strikes tend to generate a lot of conflict in the u k in the 1970s striking unions would form picket lines across the factory gates their aim was not only to prevent strikebreakers going to work but also to stop lorries delivering goods conversely firms often with the help of the police would try to get the lorries across those lines the employment acts of 1980 and 1982 stopped this struggle stopping lorries crossing picket lines had always been illegal but this new legislation gave firms power to have picket lines immediately lifted should striking workers act illegally the courts would immediately sequester the union s assets if its members refused to comply with the law using the strategic bargaining approach this paper considers the equilibrium effect of this change in legislation on union wage formation using wage and inventory data from a panel of firms across this time period this paper also formally tests that theory there have been two main approaches to bargaining theory the strategic bargaining

inventories and wage bargaining abstract a union is assumed to make a sequence of take it or leave it wage demands to a firm which produces a storable good equilibrium has the following properties 1 the firm chooses to accumulate inventories even though there is no uncertainty 2 the accumulation of inventories lowers wages by reducing the rents from further production and therefore harms the union without benefitting the firm 3 there can be intermittent work stoppages i e strikes even though there is no uncertainty these work stoppages limit the firm s inventories and hence raise wages journal of economic literature classification numbers c78 c73 j31

the effect of environmental regulation on optimal plant size and factor shares the method for measuring the effects of environmental regulation on the size distribution of industrial plants and the distribution of factor shares described in this paper focuses on the 20 industries with highest per unit pollution abatement costs and the 20 with the lowest costs the study finds that compliance with environmental laws has not only reduced the number of plants in the affected industries but has placed a greater burden on small rather than on large plants besides redistributing within industry market shares environmental regulation has increased the use of capital relative to labor although the disproportionate burden placed on small plants in the high abatement cost industries may have been unintended it is likely that large firms will be less vocal opponents of environmental regulation than are small firms 22 references 12 tables

innovation under regulatory uncertainty evidence from medical technology abstract this paper explores how the regulatory approval process affects innovation incentives in medical technologies prior studies have found early mover regulatory advantages for drugs i find the opposite for medical devices where pioneer entrants spend 34 7 2months longer than follow on entrants in regulatory approval back of the envelope calculations suggest that the cost of a delay of this length is upwards of 7 of the total cost of bringing a new high risk device to market considering potential explanations i find that approval times are largely unrelated to technological novelty but are meaningfully reduced by the publication of objective regulatory guidelines finally i consider how the regulatory process affects small firms market entry patterns and find that small firms are less likely to be pioneers in new device markets a fact consistent with relatively higher costs of doing so for more financially constrained firms

technological progress and change in market concentration in the u s 1963 77 what effect does r d induced technological progress have on market structure do the concentration ratios the most used indices of market structure increase or decrease in an industry that is faced with a high level of technological opportunity and exploits it through a high rate of r d this paper focusses on a model by nelson and winter as a theoretical starting point to deal with this question in the nelson and winter model concentration increases as a result of dynamic competition in the technologically progressive industries but their model does not allow entry and the effect on concentration may be reversed if the possibility of entry is considered empirically this paper shows that concentration ratios in the high r d industries have decreased in the united states during 1963 77

pricing profits and technological progress in the pharmaceutical industry the decades old debate over pharmaceutical industry prices profits and innovation has again intensified a number of events coalesced to refocus public interest on pharmaceuticals contributing to public concern were bureau of labor statistics price index increases for pharmaceuticals far outpacing those for the products of other industries another prominent characteristic of the pharmaceutical industry has been its extraordinarily high reported profitability this article examines the phenomena that precipitated the current pharmaceuticals debate their historical antecedents and the principal questions at issue in the author s considered judgment a pell mell march toward regulation of pharmaceutical industry pricing could seriously impair the industry s incentives for investment in new products

sunk costs and regulation in the u s pesticide industry abstract this paper examines the impact of sunk costs and market demand on the number of innovative companies the u s market share of foreign based firms and merger choice in the u s pesticide industry results are consistent with sutton s 1991 view of sunk costs and market structure in that rising endogenous sunk research costs and exogenous sunk pesticide product regulation costs and declining demand negatively affect the number of firms in the industry have a stronger negative impact on the number of smaller firms and encourage foreign based firm expansion

productivity and financial support in academic bioscience despite widespread awareness that scientific record and grant funding reinforce one another empirical models of scientific production normally consider laboratory inputs to be exogenous the present article employs a cross section of academic bioscientists to examine the mutual relationship between research output and financial support information s nonrival character is such that scientific output and funding success cannot be expressed in strictly supply and demand terms we find the typical bioscience laboratory to operate in a range of decreasing returns to scale and to over invest in laboratory equipment and materials publication and funding success strongly reinforce one another explaining the right skewed success distributions often observed in science

opportunities and benefits as determinants of the direction of scientific research abstract scientific research and private sector technological innovation differ in objectives constraints and organizational forms scientific research may thus not be driven by the direct practical benefit to others in the way that private sector innovation is alternatively some yet largely unexplored mechanisms drive the direction of scientific research to respond to the expected public benefit we test these two competing hypotheses of scientific research this is important because any coherent specification of what constitutes the socially optimal allocation of research requires that scientists take the public practical benefit of their work into account in setting their agenda we examine whether the composition of medical research responds to changes in disease prevalence while accounting for the quality of available research opportunities we match biomedical publications data with disease prevalence data and develop new methods for estimating the quality of research opportunities from textual information and structural productivity parameters

firm specific determinants of the real wage bargaining models suggest that firm specific variables play an important role in wage determination yet previous empirical studies of wage determination have largely ignored these variables the authors analysis of a large panel data set of u s wage contracts suggests that firm specific variables suggested by bargaining models such as the value of sales the capital labor ratio and the financial liquidity of the firm are important determinants of negotiated real wages copyright 1992 by mit press

the economic side effects of dangerous drug announcements immediately prior to the passage of the 1962 food and drug administration amendments there were a number of drugs recalled from markets worldwide announcements about the dangerous side effects of these drugs were associated with lower share prices for their manufacturers and the industry as a whole we perform several analyses to sort out alternative explanations for the observed declines we find that dangerous drug announcements had no effect on the sales of other drugs and did not affect the share values of european drug makers doing little business in the united states we also find that share price reductions associated with recalls in the 1970s and 1980s were confined to the manufacturers of the recalled drugs these patterns are consistent with the hypothesis that drug company shareholders viewed the recalls in the early 1960s as signals of an increase in the cost of compliance with new and more stringent drug testing requirements

regulation and firm size fda impacts on innovation this article estimates the highly differential impacts of fda regulations on pharmaceutical firms of various sizes where size is measured as scale of r d expenditures estimation is performed using the method of maximum quasi likelihoods using productivity trends of the united kingdom as a control to isolate fda regulatory effects in the united states it is shown that smaller u s pharmaceutical firms suffered devastating reductions in research productivity because of fda regulations in contrast the largest u s pharmaceutical firms apparently benefited from regulation as sales gains due to reduced competition more than offset their quite moderate declines in research productivity

the impact of regulation on pharmaceutical research expenditures a dynamic approach this paper estimates the impact of federal regulation of drug quality on research spending by the pharmaceutical industry the theoretical approach recognizes that the effects of these regulations on research spending depend upon the reactions of r d decision makers and the information available during project selection the information available to r d decision makers in the 1960s suggests that it would have been difficult for them to forecast accurately regulatory effects on research profitability as better information developed in the late 1960s and early 1970s however regulation had a significant effect on research spending these differences in response are tested econometrically and prove to be empirically significant the estimates of current regulatory effects on pharmaceutical r d spending are quite large

what is behind the recent surge in patenting abstract we investigate the cause of an unprecedented surge of us patenting over the past decade conventional wisdom points to the establishment of the court of appeals of the federal circuit by congress in 1982 we examine whether this institutional change which has benefited patent holders explains the burst in us patenting using both international and domestic data on patent applications and awards we conclude that the evidence is not favorable to the conventional view instead it appears that the jump in patenting reflects an increase in us innovation spurred by changes in the management of research

a non cooperative bargaining model with strategically timed offers abstract rubinstein s alternating offers bargaining model is enriched by allowing players to choose when and whether or not to make an offer time is continuous and players make offers whenever they wish it is assumed that upon making an offer players must wait a fixed amount of time before making another it is shown that if players can react arbitrarily quickly to their opponent s offers then all subgame perfect equilibrium outcomes are rubinstein like in particular efficient however if it takes time to react then some delay can be supported this potential delay becomes arbitrarily large as reaction times increase journal of economic literature classification numbers c78 c72

the relative impact of actual and potential rivalry on firm profitability in the pharmaceutical industry this paper estimates the effects of actual and potential rivalry on profitability of firms in the u s pharmaceutical industry during the 20 year period 1963 82 the results show that during the 1960s actual rivalry among the sampled firms did not materially affect firm profitability but that during the 1970s competition among incumbents had an increasingly adverse effect on their profitability the results also show that potential competition significantly reduced drug firms profitability during the entire 20 year period copyright 1999 john wiley sons ltd

environmental regulation whose self interests are being protected special interest can explain why environmental policy limits economic activity in areas where air quality is above minumum standards locational competition among region helped create a policy that raised factor mobility cost from slower to faster growing regions analysis of votes shows greater support for this policy was received from northern urban constituencies and the greatest opposition came from the south and the west pollution abatement costs per unit of output are higher in areas with higher not lower air quality

market structure and worker quality it is frequently asserted although never directly tested that firms in more monopolistic industries hire better qualified workers this paper presents two new results first worker quality education in particular is a strong determinant of whether a worker is employed in a concentrated industry when using a traditional data source second upon expanding the data to include measures of research and development workers of better quality are actually no more likely to locate in concentrated industries these results fit with theories claiming that industries subject to technological opportunities may be more concentrated and that those opportunities demand higher quality workers i introduction at least a score of articles since the 1960s test the hypothesis that more concentrated industries pay workers higher wages other things equal this investigation has been part of a more general examination of whether or not concentrated structure generates inefficiencies beyond the deviation of price from cost unfortunately this large scale effort has not been rewarded with consistent results separate researchers both confirm and fail to confirm an independent role for industrial concentration in wage determination among those who fail to confirm the concentration earnings hypothesis one explanation is offered most often while concentrated industries pay higher wages they obtain better qualified workers the generally acknowledged simple correlation between wages and concentration becomes an insignificant partial correlation in the presence of a vector of controls while some of the typical controls could be considered measures of worker quality others clearly are not it may be one or more of these non quality controls which frequently include industry characteristics which eliminates the significance of concentration for example plant size and unionization known to be correlated with both wages and concentration are among the more likely non quality variables which could explain the lack of the authors thank william j adams william g shepherd gary solon and frank p stafford their suggestions improved early versions of this paper thanks is also expressed to almarin phillips who suggested the association with technological progress those confirming a positive statistical association between wages and industrial concentration include dalton and ford 119771 mellow 119831 kwoka 119831 long and link 119831 and heywood 119861 those failing to find such an association include weiss 119661 rapping 1967 pugel i9801 and freeman and medoff 119811

can union labor ever cost less this paper examines the effect of unions on efficiency by estimating cost function systems over three different sets of construction projects the results show that union contractors have greater economies of scale this gives them a cost advantage in large commercial office buildings but in school and hospital construction nonunion contractors have lower costs at all output levels despite the cost differences profits for nonunion contractors in school and hospital construction are no higher than those for union contractors because the burden of higher union costs is shifted to buyers

inventory accumulation wages and employment this paper analyzes the effect of inventory accumulation on the outcome of wage and employment agreements between a union and a firm a two period model is set up with bargaining in each period and the paper analyzes under what circumstances inventories will be held even if demand and production conditions are constant it is found that inventories have an important strategic role they bring forward employment and strengthen the bargaining position of the firm in the later period however the firm s strategic use of inventories will generally be to the detriment of both parties copyright 1991 by royal economic society

merger activity in the waste disposal industry the impact and the implications of the environmental protection act over the last two and a half decades the uk s waste disposal industry has evolved from a disparate collection of localized small scale operators to a coherent multimillion pound industry with particular reference to the 1990 environmental protection act this paper uses multinomial logit analysis to estimate the degree to which increased regulation of the industry has led to a rise in merger activity within the sector it is shown that the act did increase the probability of a waste disposal firm being associated with merger activity either as an acquiring firm or as a target for other firms as a result intra industry consolidation took place alongside attempts by non waste disposal firms to diversify their interests within a buoyant sector which was avoiding the recessionary downturn affecting other sectors of the british economy

strategic bargaining with firm inventories this paper characterizes how a firm s opportunity to sell from its stock of inventories affects the outcome of strategic wage negotiations with a union of workers in equilibrium the union and firm share the benefits from an immediate return to work less the costs of a strike of infinite duration this outcome is equivalent to a nash bargaining solution in which the threat points are the agents expected payoffs should a strike last forever we also demonstrate that for a given level of inventories the wage increases when demand is high conversely given demand the wage falls as inventories rise

unionized construction workers are more productive this paper presents evidence on the effect of unionism on productivity in construction the linkages are distinct from those studied previously in industrial settings apprenticeship training and hiring halls probably raise union productivity while jurisdictional disputes and restrictive work rules lower it using brown and medoff s methodology union productivity measured by value added per employee is 44 to 52 percent higher than nonunion the estimate declines to 17 to 22 percent when estimates of interarea construction price differences are used to deflate value added occupational mix differences and possibly apprenticeship training account for 15 to 27 percent of this difference

bias in market r d portfolios abstract based on a simple contest model of product innovation we find that in accordance with conventional wisdom and contrary to much of the previous theoretical literature market competition implies an equilibrium level of risk which is too low from society s standpoint the intuition is that the divergence between private and social marginal benefits from rd and this probability is higher for lower risk projects

concentration unionism and labor earnings a sample selection approach using a simultaneous equations model of wages and union membership the elasticity of the wage with respect to market concentration is estimated to be approximately 0 2 the estimate uses a large data set and extensive controls to measure concentration s direct effect on the wage an indirect effect through unionization and a feedback effect the indirect effect represents the majority of concentration s effect copyright 1988 by mit press

heart of darkness modeling public private funding interactions inside the r d black box abstract this paper is a first step toward closing the analytical gap in the extensive literature on the results of interactions between public and private r d expenditures and their joint effects on the economy a survey focusing on econometric studies in this area reveals a plethora of sometimes confusing and frequently contradictory estimates of the response of company financed r d to changes in the level and nature of this category of public expenditures yet a theoretical framework seldom is provided within which the empirical results are to be interpreted some such structure is necessary in view of the multiple channels through which public research can affect private r d performance especially as not all the effects flow in the same direction a major cause of inconsistencies in the empirical literature is the failure to recognize key differences among the various policy experiments being considered depending upon the economy in which they are embedded and the type of public sector r d spending that is contemplated using a simple stylized structural model we identify the main channels of impact of public r d we thus can characterize the various effects distinguishing between short and long run impacts that would show up in simple regression analyses of nominal public and private r d expenditure variables within the context of our simple model it is possible to offer interpretations that shed light on recent cross section and panel data findings at both high i e national and low specific technology area levels of aggregation

market share and efficiency a reprise abstract a recent major study claims to have demonstrated the validity of the efficient market hypothesis this conclusion is unwarranted further empirical work suggests that market share is an element of industrial structure and may itself be a reflection of market power

what do we know about investment under uncertainty recent theoretical developments relating to investment under uncertainty have highlighted the importance of irreversibility for the timing of investment expenditures and their expected returns this has subsequently stimulated a growing empirical literature which examines uncertainty and threshold effects on investment behaviour this paper presents a review of this literature a variety of methods have been used to investigate the empirical implication of irreversibility in investment the majority focusing on the relationship between investment flows and proxy measures of uncertainty a general conclusion is that increased uncertainty at both aggregate and disaggregate levels leads to lower investment rates this suggests that there is an irreversibility effect under which greater uncertainty raises the value of the call option to delay a commitment to investment this effect appears to dominate any positive impact on investment arising from the fact that greater uncertability under certain circumstances increases the marginal profitability of capital the methods used raise a number of issues which call into question the reliability of the findings and these are addressed in the paper however if such irreversibility effects are present then their omission from traditional investment models casts doubt on the efficacy of such specifications jel classification d81 d92 e22

the vertical chain of research and development in the pharmaceutical industry this paper examines the relationship between basic and applied pharmaceutical research we focus on three stages of research and development r d government funded basic research publication in medical journals and industry finded applied r d we estimate that a one percent increase in basic research in a particular therapeutic category causes a 0 76 percent increase in industry r d in that category and a 1 71 percent increase in other categories mer seven years we also find that research incentives differ across government academic and industry researchers for example government funding favors diseases that are less prevalent and more debilitating than industry funding

a dynamic equilibrium model of search bargaining and money abstract this paper considers dynamic equilibria in a model with random matching strategic bargaining and money equilibrium in the bargaining game is characterized in terms of a simple differential equation when we embed this characterization into the monetary economy the model can generate outcomes such as limit cycles that never arise if one imposes a myopic nash bargaining solution as has been done in the past journal of economic literature classification numbers c78 d83 e31