Work

Competition and Innovation Revisited: A Project-Level View

Year: 2024

Type: article

Abstract: We offer new evidence on the relationship between competition and innovation that overcomes two measurement difficulties compromising the extant literature: aggregation at either firm level (or higher) of innovative activity, and the mediating influence of distance-to-technological-frontier. FDA awards of Breakthrough Therapy Designations (BTDs) on specific drugs, instrument stochastic unleveling of therapeutic (ie, product) markets. Rivals’ innovative responses generally show an inverted-U pattern in ex ante competitiveness of the shocked market. However, the shape of the relation changes with distance to technological frontier in that market, proxied by whether the rival project uses one of the technologies embedded in the BTD-awarded drug.

Source: Review of Financial Studies

DOI: 10.1093/rfs/hhae078

Authors: Jon A Garfinkel, Mosab Hammoudeh

Institutions: University of Iowa, LSU New Orleans

Language: English

Topic: Pharmaceutical Economics and Policy

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $4,229