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Induction and Evolution in the Origin of Inventions: Evidence from Smoking Cessation Products

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  • Adam Jaffe

    ()
    (Department of Economics, Brandeis University)

  • Seth Werfel

    (Federal Reserve Bank of New York)

Abstract

Neoclassical economic theory predicts that policies that discourage the consumption of a particular good will induce innovation in a socially desirable substitute. Evolutionary theory emphasizes the possibility of innovation waves associated with the identification of new dominant designs. We incorporate both of these possibilities in a model of the invention of new smoking cessation products, based on a new dataset of patents on such products from 1951-2004. We find that an increase in cigarette tax levels and smoking bans had no discernable impact on the industry-wide rate of invention in smoking cessation products. It does appear, however, that dominant designs did have substantial positive innovation effects. More specifically, the introduction of the nicotine gum and patch are estimated to have increased the rate of patenting activity in smoking cessation products by 60 and 79 percent, respectively, subject to a 10 percent rate of decay. Finally, these products had larger innovation effects at the firm level than among individual inventors.

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File URL: http://www.brandeis.edu/departments/economics/RePEc/brd/doc/Brandeis_WP09.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Brandeis University, Department of Economics and International Businesss School in its series Working Papers with number 09.

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Length: 24 pages
Date of creation: Nov 2010
Date of revision:
Handle: RePEc:brd:wpaper:09

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Postal: MS032, P.O. Box 9110, Waltham, MA 02454-9110
Web page: http://www.brandeis.edu/departments/economics/
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Keywords: Patents; Technological Change; Smoking Cessation Products; Cigarette Taxes;

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