Adaptation of Investments in the Pharmaceutical Industry

Tino Schütte ()
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Tino Schütte: Technische Universität Dresden

A chapter in Progress in Artificial Economics, 2010, pp 165-176 from Springer

Abstract: Abstract Situated in the research field of market structure and strategic behavior, a model of product market competition is developed, showing the impacts of investment adjustments on the success of companies. Placed in an agent-based multi-firm multi-product setting, we study the consequences of the two-step decision of firms to split their budgets in (i) marketing and development activities and (ii) development expenditures into innovative or imitative activities. The model is validated with empirical data of the pharmaceutical industry, with reference to the drug market in Germany. The results show that investment strategies adjusted to the behavior of direct competitors outperforms adjustments based on individual aspiration levels.

Keywords: Investment Strategy; Drug Market; Aspiration Level; Instability Index; Knowledge Stock (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-642-13947-5_14

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DOI: 10.1007/978-3-642-13947-5_14

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