Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry

Daron Acemoglu and Joshua Linn

The Quarterly Journal of Economics, 2004, vol. 119, issue 3, 1049-1090

Abstract: This paper investigates the effect of (potential) market size on entry of new drugs and pharmaceutical innovation. Focusing on exogenous changes driven by U. S. demographic trends, we find a large effect of potential market size on the entry of nongeneric drugs and new molecular entities. These effects are generally robust to controlling for a variety of supply-side factors and changes in the technology of pharmaceutical research.

Date: 2004
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Citations: View citations in EconPapers (432)

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Working Paper: Market Size in Innovation: Theory and Evidence from the Pharmaceutical Industry (2004)
Working Paper: Market Size in Innovation: Theory and Evidence From the Pharmaceutical Industry (2003)
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