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Demand Shocks, Procurement Policies, and the Nature of Medical Innovation: Evidence from Wartime Prosthetic Device Patents

Author

Listed:
  • Jeffrey Clemens

    (University of California at San Diego)

  • Parker Rogers

    (University of California at San Diego)

Abstract

We show that the demand shocks associated with the U.S. Civil War and World War I led to substantial increases in prosthetic device patenting (relative to patenting in other medical and mechanical technology classes). Through analyses of patent texts, we find that the Civil War led inventors to focus on production process improvements, while World War I did not. Further, we find that inventors emphasized dimensions of product quality that aligned with differences in buyers' preferences across wars. Alongside evidence from the historical record, these findings imply that procurement environments can significantly shape the scientific problems with which inventors engage.

Suggested Citation

  • Jeffrey Clemens & Parker Rogers, 2026. "Demand Shocks, Procurement Policies, and the Nature of Medical Innovation: Evidence from Wartime Prosthetic Device Patents," The Review of Economics and Statistics, MIT Press, vol. 108(1), pages 75-89, January.
    • Handle: RePEc:tpr:restat:v:108:y:2026:i:1:p:75-89
    DOI: 10.1162/rest_a_01365
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    1. is not listed on IDEAS
    2. Naudé, Wim & Dimitri, Nicola, 2021. "Public Procurement and Innovation for Human-Centered Artificial Intelligence," IZA Discussion Papers 14021, IZA Network @ LISER.
    3. Chiappinelli, Olga & Giuffrida, Leonardo M. & Spagnolo, Giancarlo, 2023. "Public procurement as an innovation policy: Where do we stand?," ZEW Discussion Papers 23-002, ZEW - Leibniz Centre for European Economic Research.
    4. Alexander M Danzer & Natalia Danzer & Carsten Feuerbaum, 2024. "Military spending and innovation: learning from 19th-century world fair exhibition data," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(4), pages 831-854.
    5. Martin Beraja & David Y Yang & Noam Yuchtman, 2023. "Data-intensive Innovation and the State: Evidence from AI Firms in China," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(4), pages 1701-1723.
    6. Shapiro, Adam Hale & Sudhof, Moritz & Wilson, Daniel J., 2022. "Measuring news sentiment," Journal of Econometrics, Elsevier, vol. 228(2), pages 221-243.
    7. Leila Agha & Soomi Kim & Danielle Li, 2022. "Insurance Design and Pharmaceutical Innovation," American Economic Review: Insights, American Economic Association, vol. 4(2), pages 191-208, June.
    8. Snyder, Christopher M. & Hoyt, Kendall & Gouglas, Dimitrios, 2023. "An optimal mechanism to fund the development of vaccines against emerging epidemics," Journal of Health Economics, Elsevier, vol. 91(C).
    9. Dranove, David & Garthwaite, Craig & Heard, Christopher & Wu, Bingxiao, 2022. "The economics of medical procedure innovation," Journal of Health Economics, Elsevier, vol. 81(C).
    10. Francesco Decarolis & Gaétan de Rassenfosse & Leonardo M. Giuffrida & Elisabetta Iossa & Vincenzo Mollisi & Emilio Raiteri & Giancarlo Spagnolo, 2021. "Buyers' role in innovation procurement: Evidence from US military R&D contracts," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(4), pages 697-720, November.
    11. Martin Beraja & David Y Yang & Noam Yuchtman, 2023. "Data-intensive Innovation and the State: Evidence from AI Firms in China," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(4), pages 1701-1723.
    12. Berkes, Enrico & Coluccia, Davide Maria & Dossi, Gaia & Squicciarini, Mara, 2023. "Dealing With Adversity: Religiosity or Science? Evidence From the Great Influenza Pandemic," CEPR Discussion Papers 18008, C.E.P.R. Discussion Papers.
    13. Agarwal, Ruchir & Gaule, Patrick, 2022. "What drives innovation? Lessons from COVID-19 R&D," Journal of Health Economics, Elsevier, vol. 82(C).
    14. Jeffrey P. Clemens & Morten Olsen, 2021. "Medicare and the Rise of American Medical Patenting: The Economics of User-Driven Innovation," CESifo Working Paper Series 9008, CESifo.
    15. Gamba, Simona & Magazzini, Laura & Pertile, Paolo, 2021. "R&D and market size: Who benefits from orphan drug legislation?," Journal of Health Economics, Elsevier, vol. 80(C).
    16. Yeon-Koo Che & Elisabetta Iossa & Patrick Rey, 2021. "Prizes versus Contracts as Incentives for Innovation [Subgame Perfect Implementation Under Information Perturbations]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(5), pages 2149-2178.
    17. Yannick Dupraz & Andreas Ferrara, 2025. "Fatherless: The Long-Term Effects of Losing a Father in the U.S. Civil War," Journal of Human Resources, University of Wisconsin Press, vol. 60(4), pages 1126-1174.
    18. Jessica Ya SUN & Ting YIN & Zhiyong LIU, 2023. "When State Becomes the Only Buyer: Effects of national volume-based procurement of cardiac stents in China," Discussion papers 23065, Research Institute of Economy, Trade and Industry (RIETI).
    19. Brehm, Johannes & aus dem Moore, Nils & Gruhl, Henri, 2022. "Driving Innovation? – Carbon Tax Effects in the Swedish Transport Sector," VfS Annual Conference 2022 (Basel): Big Data in Economics 264085, Verein für Socialpolitik / German Economic Association.
    20. Rogers, Parker, 2022. "Regulating the Innovators: Approval Costs and Innovation in Medical Technologies," SocArXiv c8s3m, Center for Open Science.
    21. repec:osf:socarx:c8s3m_v1 is not listed on IDEAS
    22. Massimo Florio & Simona Gamba, 2021. "Biomed Europa: After the coronavirus, a public infrastructure to overcome the pharmaceutical oligopoly," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(3), pages 387-409, September.

    More about this item

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • I10 - Health, Education, and Welfare - - Health - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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