Towards a History Friendly Model of Innovation, Market Structure and Regulation in the Dynamics of the Pharmaceutical Industry: the Age of Random Screening
In this paper we present a model of the long term dynamics of market structure and innovation in the pharmaceutical industry in a history friendly way. Our results show a strong increase in concentration in each therapeutic area, but a rather low level of concentration in the overall market. Innovative firms continue to maintain a key role. Both demand growth and increase in technological opportunities have similar effects on the role of innovative firms, exploration and total quality, but a contrasting effects on concentration (positive for demand growth, and less so for technological opportunities). We have also explored different situations of patent protection. As expected, an increase in patent protection increase concentration but decreases exploration, while the opposite holds for no patent protection. Interestingly enough, an increase in patent protection is not able to countervail the negative effects of no growth in demand as far as quality and exploratory activities are concerned. Finally, an increase in the cost of research or in the stringency of approval procedures have quite different effects on concentration, exploration and quality: the first increases concentration and reduces quality, the second does not affect concentration, but affects negatively exploration as well as quality.
|Date of creation:||May 2000|
|Date of revision:||Jan 2001|
|Note:||A previous version of this model was presented at the Conference in Honour of Paul David: "New Frontiers in the Economics of Innovation and New Technologies", Turin, May 2000.|
|Contact details of provider:|| Postal: |
Web page: http://www.kites.unibocconi.it/
|Order Information:|| Postal: E G E A - via R. Sarfatti, 25 - 20136 Milano -Italy|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Arora, Ashish & Gambardella, Alfonso, 1994. "The changing technology of technological change: general and abstract knowledge and the division of innovative labour," Research Policy, Elsevier, vol. 23(5), pages 523-532, September.
- Catherine Matraves, 1998.
"Market Structure, R&D and Advertising in the Pharmaceutical Industry,"
CIG Working Papers
FS IV 98-17, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Matraves, Catherine, 1999. "Market Structure, R&D and Advertising in the Pharmaceutical Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(2), pages 169-94, June.
- Teece, David J., 1993.
"Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy,"
Elsevier, vol. 22(2), pages 112-113, April.
- Teece, David J., 1986. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, vol. 15(6), pages 285-305, December.
- Malerba, Franco & Nelson, Richard & Orsenigo, Luigi & Winter, Sidney, 2001. "Competition and industrial policies in a 'history friendly' model of the evolution of the computer industry," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 635-664, April.
- Pisano, Gary P., 1991. "The governance of innovation: Vertical integration and collaborative arrangements in the biotechnology industry," Research Policy, Elsevier, vol. 20(3), pages 237-249, June.
- Arora, Ashish & Gambardella, Alfonso, 1990. "Complementarity and External Linkages: The Strategies of the Large Firms in Biotechnology," Journal of Industrial Economics, Wiley Blackwell, vol. 38(4), pages 361-79, June.
- Merges, Robert P. & Nelson, Richard R., 1994. "On limiting or encouraging rivalry in technical progress: The effect of patent scope decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 25(1), pages 1-24, September.
- Gambardella, Alfonso & Orsenigo, Luigi & Pammolli, Fabio, 2000. "Global Competitiveness in Pharmaceuticals: A European Perspective," MPRA Paper 15965, University Library of Munich, Germany.
- Henderson, Rebecca., 1994. "The evolution of integrative capability : innovation in cardiovascular drug discovery," Working papers 3711-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Giulio Bottazzi & Giovanni Dosi & Marco Lippi & Fabio Pammolli & Massimo Riccaboni, 2001.
"Innovation and Corporate Growth in the Evolution of the Drug Industry,"
LEM Papers Series
2001/02, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- 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.
- Malerba, Franco, et al, 1999. "'History-Friendly' Models of Industry Evolution: The Computer Industry," Industrial and Corporate Change, Oxford University Press, vol. 8(1), pages 3-40, March.
- Henderson, Rebecca. & Cockburn, Iain., 1994. "Measuring competence? : exploring firm effects in pharmaceutical research," Working papers 3712-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
When requesting a correction, please mention this item's handle: RePEc:cri:cespri:wp124. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Valerio Sterzi)
If references are entirely missing, you can add them using this form.