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on Intellectual Property Rights |
| By: | Czarnitzki, Dirk; Toole, Andrew A. |
| Abstract: | The real options investment theory shows that greater uncertainty about market revenues reduces current R&D investment by increasing the value of waiting. This paper presents empirical evidence that patent protection mitigates the effect market uncertainty on R&D investment. |
| Keywords: | Real Options Theory, Uncertainty, R&D, Intellectual Property Protection, Censored Regression |
| JEL: | C25 O31 O33 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5450&r=ipr |
| By: | Frey, Rainer; Hussinger, Katrin |
| Abstract: | Technological change is often hypothesized as one of the main drivers of merger activities. This paper analyzes the role of technology in mergers and acquisitions (M&As) at the firm level. Based on a newly created data set that combines financial information and patent data for public firms in Europe as well as country level variables, we apply a structural model to investigate technology-related motivations behind merger formation. Distinguishing between cross-border and domestic M&As, we find that technological relatedness of the M&A partners reduces uncertainty and the expected risk of failure associated with cross-border acquisitions significantly, whereas there is no evidence for technological complementarities driving domestic M&As. The relevance of technology for cross-border M&As further illustrates the international character of technology markets. |
| Keywords: | domestic versus cross-border M&As, technological relatedness, market relatedness |
| JEL: | C25 G34 O32 O34 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5463&r=ipr |
| By: | Dean Baker |
| Abstract: | The rate of new drug development has stagnated, in spite of large increases in both private and public sector spending on biomedical research. The flip side of slower progress is higher drug costs. The cost of developing new drugs has been rising at an average real rate of more than 7 percent since 1987. This report considers the ways in which government patent monopolies distort incentives so that pharmaceutical companies may not opt to minimize research costs. It documents some of the perverse incentives created by patent monopolies in drugs. |
| JEL: | O31 O32 O34 O38 L12 I18 H21 D42 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:epo:papers:2007-07&r=ipr |
| By: | Czarnitzki, Dirk; Toole, Andrew A. |
| Abstract: | The literature suggests that public research and development (R&D) subsidies may reduce market failures affecting private R&D investment caused by incomplete appropriability of knowledge and financial constraints due capital market imperfections. Drawing on the theory of investment under uncertainty, this paper argues that public R&D subsidies increase business R&D investment through an additional mechanism – mitigating the effects of market uncertainty on R&D investment in markets for new products. Using a sample of German manufacturing firms, we show that market uncertainty indeed reduces R&D investment, and that R&D subsidies mitigate the effect of uncertainty. Our findings suggest that public policies aimed at increasing business R&D investment can achieve this objective by reducing the degree of uncertainty in the demand for innovative products. |
| Keywords: | Real Options Theory, Uncertainty, R&D, Censored Regression |
| JEL: | C25 O31 O33 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5449&r=ipr |
| By: | Aerts, Kris; Schmidt, Tobias |
| Abstract: | In this paper we empirically test whether public R&D subsidies crowd out private R&D investment in Flanders and Germany, using firm level data from the Flemish and German part of the Community Innovation survey (CIS III and IV). Both the non-parametric matching estimator and the conditional difference-in-difference estimator with repeated cross-sections (CDiDRCS) clearly indicate that the crowding-out hypothesis can be rejected: funded firms are significantly more R&D active than non-funded firms. In the domain of additionality effects of R&D subsidies, this paper is the first to apply the CDiDRCS method. |
| Keywords: | R&D, Subsidies, Policy Evaluation, Conditional Difference-in-Difference |
| JEL: | C14 C21 H50 O38 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:5457&r=ipr |
| By: | Sinha, Dipendra |
| Abstract: | This paper looks at the relationship between patents and economic growth in Japan and South Korea using both individual country and panel data. For the econometric estimation, we use annual data for 1963-2005. For Japan, we find that the logarithms of real GDP and the number of patents are cointegrated. For South Korea, we do find such evidence. For Japan, we find a two-way causality between the growth of real GDP and the growth of the number of patents. For panel data, we find that the logarithms of real GDP and the number of patents are cointegrated. We find some evidence that the growth of real GDP Granger causes the growth of the number of patents. However, we do not find any evidence of reverse causality. |
| Keywords: | patents; innovations; panel data |
| JEL: | O30 C10 |
| Date: | 2007–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2547&r=ipr |
| By: | Pattikawa, L.H. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | Nowadays, the U.S. pharmaceutical industry has been under thorough scrutiny. Popular press claims of intensive marketing activities that go beyond R&D, the strong increase of me-too drugs, and, at the same time, the high industry profitability have contributed to public skepticism. Despite this increasing role of marketing, studies on the profitability of pharmaceutical firms mainly focus on the role of R&D. In this paper, we investigate the impact of advertising and product differentiation on pharmaceutical firms? market value over the period 1971-2005. Especially, we examine whether there has been a change in the pattern of returns in these variables over this period. Our results show that, nowadays, pharmaceutical firms? performance is not only closely linked to their R&D activities but also to marketing activities such as advertising and product differentiation. Since the 1990s, the return of advertising has become three times larger than that of R&D. In addition, we found that the impact of product differentiation came largely from the introduction of the so called incrementally modified drugs (IMD). The vast increase of the number of IMDs since the 1990s is likely to contribute to this development. Our results emphasize the role of advertising and product differentiation in the virtuous rent-seeking behavior in the pharmaceutical industry. |
| Keywords: | Advertising;Product differentiation;Marketing;Market value;Panel data;Pharmaceutical industry; |
| Date: | 2007–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:300010401&r=ipr |
| By: | Iván Moreno Torres; Jaume Puig; Joan-Ramon Borrell-Arqué |
| Abstract: | The aim of this paper is to analyse empirically entry decisions by generic firms into markets with tough regulation. Generic drugs might be a key driver of competition and cost containment in pharmaceutical markets. The dynamics of reforms of patents and pricing across drug markets in Spain are useful to identify the impact of regulations on generic entry. Estimates from a count data model using a panel of 86 active ingredients during the 1999–2005 period show that the drivers of generic entry in markets with price regulations are similar to less regulated markets: generic firms entries are positively affected by the market size and time trend, and negatively affected by the number of incumbent laboratories and the number of substitutes active ingredients. We also find that contrary to what policy makers expected, the system of reference pricing restrains considerably the generic entry. Short run brand name drug price reductions are obtained by governments at the cost of long run benefits from fostering generic entry and post-patent competition into the markets. |
| Keywords: | Entry; Generic Drugs; Pharmaceutical industry; Reference pricing |
| JEL: | I11 L11 L65 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfses:1014&r=ipr |