Market size in innovation
Subtitle: theory and evidence from the pharmaceutical industry
By: [by] Daron Acemoglu [and] Joshua Linn
Contributors: Linn, Joshua; Massachusetts Institute of Technology. Dept. of Economics
Series: Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 03-33; Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 03-33.
Publisher: Massachusetts Institute of Technology, Dept. of Economics
Published: 2003
Place of publication: Cambridge, MA
Language: eng
Number of pages: 40
Description: This paper investigates the effect of (potential) market size on entry of new drugs and pharmaceutical innovation. Focusing on exogenous changes driven by U.S. demographic trends, we find that a 1 percent increase in the potential market size for a drug category leads to a 4 to 6 percent increase in the number of new drugs in that category. This response comes from both the entry of generic drugs and new non-generic drugs, and is generally robust to controlling for a variety of non-profit factors, pre-existing trends, and changes in health care coverage. Keywords: Economic Growth, Entry, Innovation, Pharmaceuticals, Profit Incentives. JEL Classifications: O31, O33, L65.
Notes: "September, 2003."

Includes bibliographical references (p. 35-37).

Abstract in HTML and working paper for download in PDF available via World Wide Web at the Social Science Research Network.

Partially funded by the National Science Foundation and the Russell Sage Foundation.