Missing Markets for Innovation: Evidence from New Uses for Existing Drugs

Eric Budish, Maya M. Durvasula, Benjamin N. Roin and Heidi Williams ()

No 34222, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We investigate missing markets for innovation: contexts where intellectual property rights necessary to incentivize research investment are either unavailable or unenforceable. A simple theoretical model formalizes the conditions that yield missing investment. We identify an empirical setting—research into new uses for existing drugs— with sharp variation in the enforceability of intellectual property rights on comparable inventions. We show that when intellectual property rights become unenforceable, research investment and commercialization nearly cease. Estimates of the value of this missing investment are in the trillions of dollars. We discuss the implications of these findings for the design of innovation policy.

JEL-codes: D47 I10 I18 K23 L65 O0 O3 O30 O34 (search for similar items in EconPapers)
Date: 2025-09
New Economics Papers: this item is included in nep-hea, nep-ind, nep-ino and nep-tid
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