Induction and Evolution in the Origin of Inventions: Evidence from Smoking Cessation Products
AbstractNeoclassical 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 discernible 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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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16543.
Date of creation: Nov 2010
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Other versions of this item:
- Adam Jaffe & Seth Werfel, 2010. "Induction and Evolution in the Origin of Inventions: Evidence from Smoking Cessation Products," Working Papers 09, Brandeis University, Department of Economics and International Businesss School.
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
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