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

Author

Listed:
  • Francesca Di Iorio

    (Università di Napoli Federico II)

  • Maria Letizia Giorgietti

    (Università di Milano)

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

  • Francesca Di Iorio & Maria Letizia Giorgietti, 2019. "Launch of a product and patents: evidence from the US cardiovascular pharmaceutical sector," DEM Working Papers Series 169, University of Pavia, Department of Economics and Management.
    • Handle: RePEc:pav:demwpp:demwp0169
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    References listed on IDEAS

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    More about this item

    Keywords

    Entry; Patents; Panel data; Probit model; Submarkets;
    All these keywords.

    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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