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Expected Profits and the Scientific Novelty of Innovation

SSRN, ISSN: 1556-5068
2020
  • 2
    Citations
  • 1,205
    Usage
  • 5
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    2
    • Citation Indexes
      2
  • Usage
    1,205
    • Abstract Views
      987
    • Downloads
      218
  • Captures
    5
  • Ratings
    • Download Rank
      280,175

Article Description

Innovation policy involves trading off monopoly output and pricing today in exchange for incentives for firms to develop new products. While existing research demonstrates that expected profits fuel R&D investments, little is known about the novelty of funded projects. We expand this literature by examining the scientific novelty of pharmaceutical R&D following the creation of Medicare Part D. We find little evidence that the implied positive demand shock prompted firms to undertake scientifically novel R&D, as measured by whether scientific approaches had been used before. However, some evidence suggests that firms invested in products involving novel combinations of scientific approaches.

Bibliographic Details

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