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Pioneers, Imitators, and Generics — a Simulation Model of Schumpeterian Competition

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  • Henry G. Grabowski
  • John M. Vernon

Abstract

A computer simulation model in the tradition of evolutionary models of technical change is developed in this paper. It focuses on R&D competition in new product introductions and is based on data for the U. S. pharmaceutical industry during the 1970s. The sensitivity of innovation levels to the rate of generic competition, regulatory review time, and patent life is examined in the computer simulation experiments. These factors are found to have significant long-run effects on industry structure and innovation levels.

Suggested Citation

  • Henry G. Grabowski & John M. Vernon, 1987. "Pioneers, Imitators, and Generics — a Simulation Model of Schumpeterian Competition," The Quarterly Journal of Economics, Oxford University Press, vol. 102(3), pages 491-525.
  • Handle: RePEc:oup:qjecon:v:102:y:1987:i:3:p:491-525.
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    File URL: http://hdl.handle.net/10.2307/1884215
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    Cited by:

    1. Llerena, Patrick & Oltra, Vanessa, 2002. "Diversity of innovative strategy as a source of technological performance," Structural Change and Economic Dynamics, Elsevier, vol. 13(2), pages 179-201, June.
    2. Johanna Vásquez Velásquez & José Vicente Cadavid Herrera & Andrés Ramírez Hassan & Karoll Gómez Portilla, 2013. "Elasticidad de la demanda por medicamentos en el mercado farmacéutico privado en Colombia," REVISTA ECOS DE ECONOMÍA, UNIVERSIDAD EAFIT, June.
    3. Bottazzi, Giulio & Dosi, Giovanni & Lippi, Marco & Pammolli, Fabio & Riccaboni, Massimo, 2001. "Innovation and corporate growth in the evolution of the drug industry," International Journal of Industrial Organization, Elsevier, vol. 19(7), pages 1161-1187, July.
    4. Milo Bianchi & Magnus Henrekson, 2005. "Is Neoclassical Economics still Entrepreneurless?," Kyklos, Wiley Blackwell, vol. 58(3), pages 353-377, July.
    5. James W. Hughes & Michael J. Moore & Edward A. Snyder, 2002. ""Napsterizing" Pharmaceuticals: Access, Innovation, and Consumer Welfare," NBER Working Papers 9229, National Bureau of Economic Research, Inc.
    6. Giaccotto, Carmelo & Golec, Joseph & Vernon, John, 2011. "New estimates of the cost of capital for pharmaceutical firms," Journal of Corporate Finance, Elsevier, vol. 17(3), pages 526-540, June.
    7. Laussel, Didier & Le Breton, Michel, 1995. "A general equilibrium theory of firm formation based on individual unobservable skills," European Economic Review, Elsevier, vol. 39(7), pages 1303-1319, August.
    8. Mariana Mazzucato & Stuart Parris, 2015. "High-growth firms in changing competitive environments: the US pharmaceutical industry (1963 to 2002)," Small Business Economics, Springer, vol. 44(1), pages 145-170, January.

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