IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/61030.html
   My bibliography  Save this paper

Incentives for product and process innovations: a case for the drug industry

Author

Listed:
  • Bhan, Aditya
  • Kabiraj, Tarun

Abstract

We consider an interaction of competing firms in an integrated world market and study their R&D incentives under each of product patent and process patent regimes. We follow a framework generally observed in the drug industry. We show that product patent regime leads to a larger R&D investment. Consumers may also benefit from product patenting. However, if the number of goods is large enough, the choice of patent regime loses significance with respect to R&D incentives.

Suggested Citation

  • Bhan, Aditya & Kabiraj, Tarun, 2014. "Incentives for product and process innovations: a case for the drug industry," MPRA Paper 61030, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:61030
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/61030/1/MPRA_paper_61030.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Diwan, Ishac & Rodrik, Dani, 1991. "Patents, appropriate technology, and North-South trade," Journal of International Economics, Elsevier, vol. 30(1-2), pages 27-47, February.
    2. Michael Fritsch & Monika Meschede, 2001. "Product Innovation, Process Innovation, and Size," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 19(3), pages 335-350, November.
    3. Deardorff, A.V, 1990. "Should Patent Protection Be Extended To All Countries?," Working Papers 259, Research Seminar in International Economics, University of Michigan.
    4. Alan V. Deardorff, 1990. "Should Patent Protection Be Extended to All Developing Countries?," The World Economy, Wiley Blackwell, vol. 13(4), pages 497-508, December.
    5. Mathew, Anuj Joshua & Mukherjee, Arijit, 2014. "Intellectual property rights, southern innovation and foreign direct investment," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 128-137.
    6. repec:fth:michin:259 is not listed on IDEAS
    7. Cohen, Wesley M & Klepper, Steven, 1996. "Firm Size and the Nature of Innovation within Industries: The Case of Process and Product R&D," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 232-243, May.
    8. Yong Yang, 1998. "Why Do Southern Countries Have Little Incentive to Protect Northern Intellectual Property Rights?," Canadian Journal of Economics, Canadian Economics Association, vol. 31(4), pages 800-816, November.
    9. Greenaway, David & Sapir, Andre, 1992. "New issues in the Uruguay round : Services, TRIMs and TRIPs," European Economic Review, Elsevier, vol. 36(2-3), pages 509-518, April.
    10. Marjit, Sugata & Beladi, Hamid, 1998. "Product Versus Process Patents: A Theoretical Approach," Journal of Policy Modeling, Elsevier, vol. 20(2), pages 193-199, April.
    11. Sakakibara, Mariko & Branstetter, Lee, 2001. "Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 77-100, Spring.
    12. Swapnendu Banerjee, 2008. "Optimal Patent Length in a North-South Framework," Working Papers id:1322, eSocialSciences.
    13. Subramanian, Arvind, 1991. "The international economics of intellectual property right protection: A welfare-theoretic trade policy analysis," World Development, Elsevier, vol. 19(8), pages 945-956, August.
    14. Keith E. Maskus, 1990. "Normative Concerns in the International Protection of Intellectual Property Rights," The World Economy, Wiley Blackwell, vol. 13(3), pages 387-409, September.
    15. Arijit Mukherjee & Achintya Ray, 2007. "Patents, imitation and welfare," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(3), pages 227-236.
    16. Arijit Mukherjee & Uday Bhanu Sinha, 2013. "Patent Protection, Southern Innovation and Welfare in a North–South Trade Model," Economica, London School of Economics and Political Science, vol. 80(318), pages 248-273, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. GianCarlo Moschini, 2004. "Intellectual Property Rights and the World Trade Organization: Retrospect and Prospects," Chapters, in: Giovanni Anania & Mary E.. Bohman & Colin A. Carter & Alex F. McCalla (ed.), Agricultural Policy Reform and the WTO, chapter 19, pages 474-511, Edward Elgar Publishing.
    2. Marjit, Sugata & Kabiraj, Tarun & Dutta, Arijita, 2009. "Strategic Under-utilization of Patents and Entry Deterrence: The Case of Pharmaceutical Industry," MPRA Paper 19157, University Library of Munich, Germany.
    3. Caswell, Margriet F. & Fuglie, Keith O. & Klotz, Cassandra A., 1994. "Agricultural Biotechnology: An Economic Perspective," Agricultural Economic Reports 262025, United States Department of Agriculture, Economic Research Service.
    4. Yi Qian, 2010. "Are National Patent Laws the Blossoming Rain?," NBER Working Papers 16295, National Bureau of Economic Research, Inc.
    5. Lu, Louis Y.Y. & Liu, John S., 2016. "A novel approach to identify the major research themes and development trajectory: The case of patenting research," Technological Forecasting and Social Change, Elsevier, vol. 103(C), pages 71-82.
    6. Mukherjee, Arijit & Neogi, Chiranjib, 2014. "Vertical technology transfer and the welfare implications of patent protection," Research in Economics, Elsevier, vol. 68(3), pages 239-247.
    7. Cherng G. Ding & Na‐Ting Liu, 2009. "Productivity Changes Of Asian Economies By Taking Into Account Software Piracy," Economic Inquiry, Western Economic Association International, vol. 47(1), pages 135-145, January.
    8. Alan V. Deardorff, 2007. "Trade Policy Options for Korea Trade Policy Options for Korea Outside the Doha Round Outside the Doha Round," Working Papers 568, Research Seminar in International Economics, University of Michigan.
    9. Leonard F.S. Wang & Arijit Mukherjee, 2014. "Patent Protection, Innovation and Technology Licensing," Australian Economic Papers, Wiley Blackwell, vol. 53(3-4), pages 245-254, December.
    10. Tavassoli, Sam, 2015. "Innovation determinants over industry life cycle," Technological Forecasting and Social Change, Elsevier, vol. 91(C), pages 18-32.
    11. Shiyuan Pan & Heng-fu Zou & Tailong Li, 2010. "Patent Protection, Technological Change and Wage Inequality," CEMA Working Papers 437, China Economics and Management Academy, Central University of Finance and Economics.
    12. Arijit Mukherjee, 2014. "Patent protection under endogenous product differentiation," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 21(1), pages 78-93, March.
    13. Holmes, Peter & Lopez-Gonzalez, Javier & MILE 02, Anirudh Shingal, 2011. "TRIPS and Special & Differential Treatment – Revisiting the Case for Derogations in Applying Patent Protection for Pharmaceuticals in Developing Count," Papers 238, World Trade Institute.
    14. Alan V. Deardorff & Robert M. Stern, 2003. "Enhancing the Benefits for Developing Countries in the Doha Development Agenda Negotiations," Working Papers 498, Research Seminar in International Economics, University of Michigan.
    15. Hervas-Oliver, Jose-Luis & Sempere-Ripoll, Francisca & Boronat-Moll, Carles, 2012. "Process innovation objectives and management complementarities: patterns, drivers, co-adoption and performance effects," MERIT Working Papers 2012-051, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    16. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2009. "Pros and Cons of Linking Trade and Labor Standards," World Scientific Book Chapters, in: Globalization And International Trade Policies, chapter 16, pages 599-621, World Scientific Publishing Co. Pte. Ltd..
    17. Frisvold, George B. & Condon, Peter T., 1998. "The convention on biological diversity and agriculture: Implications and unresolved debates1," World Development, Elsevier, vol. 26(4), pages 551-570, April.
    18. Baumann, Julian & Kritikos, Alexander S., 2016. "The link between R&D, innovation and productivity: Are micro firms different?," Research Policy, Elsevier, vol. 45(6), pages 1263-1274.
    19. Becker, Annette & Hottenrott, Hanna & Mukherjee, Anwesha, 2022. "Division of labor in R&D? Firm size and specialization in corporate research," Journal of Economic Behavior & Organization, Elsevier, vol. 194(C), pages 1-23.
    20. Hudson, John & Minea, Alexandru, 2013. "Innovation, Intellectual Property Rights, and Economic Development: A Unified Empirical Investigation," World Development, Elsevier, vol. 46(C), pages 66-78.

    More about this item

    Keywords

    Innovation; process patenting; product patenting; drug industry;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:61030. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.