Induction and Evolution in the Origin of Inventions: Evidence from Smoking Cessation Products

26 Pages Posted: 22 Nov 2010 Last revised: 29 Oct 2014

See all articles by Seth H. Werfel

Seth H. Werfel

Stanford University, Department of Political Science, Students

Adam B. Jaffe

Motu Economic and Public Policy Research; Brandeis University; National Bureau of Economic Research (NBER)

Date Written: November 2010

Abstract

Neoclassical economic theory predicts that policies that discourage the consumption of a particular good will induce innovation in a socially desirable substitute. Evolutionary theory emphasizes the possibility of innovation waves associated with the identification of new dominant designs. We incorporate both of these possibilities in a model of the invention of new smoking cessation products, based on a new dataset of patents on such products from 1951-2004. We find that an increase in cigarette tax levels and smoking bans had no discernible impact on the industry-wide rate of invention in smoking cessation products. It does appear, however, that dominant designs did have substantial positive innovation effects. More specifically, the introduction of the nicotine gum and patch are estimated to have increased the rate of patenting activity in smoking cessation products by 60 and 79 percent, respectively, subject to a 10 percent rate of decay. Finally, these products had larger innovation effects at the firm level than among individual inventors.

Suggested Citation

Werfel, Seth H. and Jaffe, Adam B., Induction and Evolution in the Origin of Inventions: Evidence from Smoking Cessation Products (November 2010). NBER Working Paper No. w16543. Available at SSRN: https://ssrn.com/abstract=1711683

Seth H. Werfel (Contact Author)

Stanford University, Department of Political Science, Students ( email )

Stanford, CA 94305
United States

HOME PAGE: http://www.sethwerfel.net

Adam B. Jaffe

Motu Economic and Public Policy Research ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

HOME PAGE: http://motu.org.nz

Brandeis University ( email )

Waltham, MA 02454-9110
United States
781-736-2251 (Phone)
781-736-2263 (Fax)

HOME PAGE: http://www.brandeis.edu/global/people/faculty/jaff

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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