Munich Personal RePEc Archive

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

Bhan, Aditya and Kabiraj, Tarun (2014): Incentives for product and process innovations: a case for the drug industry.

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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.

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