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Adaptation of Investments in the Pharmaceutical Industry

In: Progress in Artificial Economics

Author

Listed:
  • Tino Schütte

    (Technische Universität Dresden)

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.

Suggested Citation

  • Tino Schütte, 2010. "Adaptation of Investments in the Pharmaceutical Industry," Lecture Notes in Economics and Mathematical Systems, in: Marco Li Calzi & Lucia Milone & Paolo Pellizzari (ed.), Progress in Artificial Economics, pages 165-176, Springer.
    • Handle: RePEc:spr:lnechp:978-3-642-13947-5_14
    DOI: 10.1007/978-3-642-13947-5_14
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