TY  - JOUR
AU  - Acemoglu,Daron
AU  - Linn,Joshua
TI  - Market Size in Innovation: Theory and Evidence From the Pharmaceutical Industry
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10038
PY  - 2003
Y2  - October 2003
UR  - http://www.nber.org/papers/w10038
L1  - http://www.nber.org/papers/w10038.pdf
N1  - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA  02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu

Joshua Linn
Department of Economics
University of Illinois at Chicago
601 South Morgan St., 2102UH, M/C 144
Chicago, IL  60607-7121
Tel: (312) 413-9444
Fax: (312) 996-3344
E-Mail: jlinn@uic.edu
AB  - This paper investigates the effect of (potential) market size on entry of new drugs and pharmaceutical innovation. Focusing on exogenous changes driven by U.S. demographic trends, we find that a 1 percent increase in the potential market size for a drug category leads to a 4 to 6 percent increase in the number of new drugs in that category. This response comes from both the entry of generic drugs and new non-generic drugs, and is generally robust to controlling for a variety of non-profit factors, pre-existing trends
ER  -