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Cyclical Concentration And Biotech R&D Activity: A Neo-Schumpeterian Model

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Listed:
  • Oehmke, James F.
  • Wolf, Christopher A.
  • Weatherspoon, Dave D.
  • Naseem, Anwar
  • Maredia, Mywish K.
  • Raper, Kellie Curry
  • Hightower, Amie L.

Abstract

Several characteristics of biotech industry structure follow cyclical patterns. Mergers and acquisitions activity shows cyclical behavior, with peaks from 1988-92 and 1996-97 and a valley from 1993-95. The ratio of large-firm to small-firm field trials, and the Herfindahl-Hirshmann concentration index, move pro-cyclically with M&A activity. This paper develops a formal, dynamic, neo-Schumpeterian model of endogenous R&D and innovation. The model generalizes and extends the literature on biotech industry concentration. For specified parameter values, the out-of-steady-state dynamics are examined, and shown to generate model behavior which is consistent with empirical descriptions of biotech concentration and R&D-activity cycles.

Suggested Citation

  • Oehmke, James F. & Wolf, Christopher A. & Weatherspoon, Dave D. & Naseem, Anwar & Maredia, Mywish K. & Raper, Kellie Curry & Hightower, Amie L., 1999. "Cyclical Concentration And Biotech R&D Activity: A Neo-Schumpeterian Model," Staff Paper Series 11792, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    • Handle: RePEc:ags:midasp:11792
    DOI: 10.22004/ag.econ.11792
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    References listed on IDEAS

    as
    1. Hayenga, Marvin L. & Kalaitzandonakes, Nicholas, 1999. "Structural Changes in the Biotechnology and Seed Industrial Complex; Theory and Evidence," Staff General Research Papers Archive 10404, Iowa State University, Department of Economics.
    2. James F. Oehmke & Dave D. Weatherspoon & Christopher A. Wolf & Anwar Naseem & Mywish Maredia & Amie Hightower, 2000. "Is agricultural research still a public good?," Agribusiness, John Wiley & Sons, Ltd., vol. 16(1), pages 68-81.
    3. Oehmke, James F. & Wolf, Christopher A. & Weatherspoon, Dave D. & Naseem, Anwar & Maredia, Mywish K. & Raper, Kellie Curry & Hightower, Amie L., 1999. "Cyclical Concentration And Consolidation In Biotech R&D: A Neo-Schumpeterian Model," Staff Paper Series 11812, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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