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Incentives for product and process innovations: a case for the drug industry

Author

Listed:
  • Bhan, Aditya
  • Kabiraj, Tarun

Abstract

We consider an interaction of competing firms in an integrated world market and study their R&D incentives under each of product patent and process patent regimes. We follow a framework generally observed in the drug industry. We show that product patent regime leads to a larger R&D investment. Consumers may also benefit from product patenting. However, if the number of goods is large enough, the choice of patent regime loses significance with respect to R&D incentives.

Suggested Citation

  • Bhan, Aditya & Kabiraj, Tarun, 2014. "Incentives for product and process innovations: a case for the drug industry," MPRA Paper 61030, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:61030
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    File URL: https://mpra.ub.uni-muenchen.de/61030/1/MPRA_paper_61030.pdf
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    References listed on IDEAS

    as
    1. Diwan, Ishac & Rodrik, Dani, 1991. "Patents, appropriate technology, and North-South trade," Journal of International Economics, Elsevier, vol. 30(1-2), pages 27-47, February.
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    More about this item

    Keywords

    Innovation; process patenting; product patenting; drug industry;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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