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Launch of a product and patents: evidence from the US cardiovascular pharmaceutical sector

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  • F. Di Iorio
  • M. Letizia Giorgetti

Abstract

Recent literature on the role of patents in shaping competition between incumbents and new entrants shows mixed evidence, as patents can discourage entry into markets but may also encourage potential entrants by increasing profitability from research and development. The increasing use of patents as strategic weapons motivates this investigation of the impact of innovation on competition. In a case study of US pharmaceutical cardiovascular submarkets over the period 1988–1998, we use a panel probit model to study the impact of a firm’s patents and rivals’ patents in the firm’s decision to launch new products. Our results show that the number of a firm’s lagged patents encourages the firm’s entry with new products, while rivals’ initial stock of patents discourages entry, but more recent patents promote entry by opening new technological opportunities.

Suggested Citation

  • F. Di Iorio & M. Letizia Giorgetti, 2020. "Launch of a product and patents: evidence from the US cardiovascular pharmaceutical sector," Industry and Innovation, Taylor & Francis Journals, vol. 27(7), pages 789-803, August.
    • Handle: RePEc:taf:indinn:v:27:y:2020:i:7:p:789-803
    DOI: 10.1080/13662716.2019.1685373
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    Cited by:

    1. Blind, Knut & Münch, Florian, 2024. "The interplay between innovation, standards and regulation in a globalising economy," LSE Research Online Documents on Economics 122260, London School of Economics and Political Science, LSE Library.

    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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