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Blockbusters, Sequels and the Nature of Innovation

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  • Wesley M. Cohen
  • Matthew J. Higgins
  • William D. Miles
  • Yoko Shibuya

Abstract

Using detailed product- and invention-level data from the pharmaceutical industry, we demonstrate that firms with particularly high-selling “blockbuster” products concentrate their development efforts on new products that both target the same customer segments and are more likely to be technically similar to existing blockbuster products. This behavior, driven by an expectation of the stickiness of demand for existing product offerings, limits firms' incentives to invest in entirely new products targeting different customer segments. Our findings offer insights into how blockbuster products shape firms' customer segment and innovation choices, with implications for understanding the dynamics of technological change in R&D-intensive industries.

Suggested Citation

  • Wesley M. Cohen & Matthew J. Higgins & William D. Miles & Yoko Shibuya, 2025. "Blockbusters, Sequels and the Nature of Innovation," NBER Working Papers 33957, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33957
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    More about this item

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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