Do Firms Underinvest in Long-Term Research? Evidence from Cancer Clinical Trials
52 Pages Posted: 14 Sep 2013 Last revised: 3 Feb 2023
Date Written: September 2013
Abstract
We investigate whether private research investments are distorted away from long-term projects. Our theoretical model highlights two potential sources of this distortion: short-termism and the fixed patent term. Our empirical context is cancer research, where clinical trials – and hence, project durations – are shorter for late-stage cancer treatments relative to early-stage treatments or cancer prevention. Using newly constructed data, we document several sources of evidence that together show private research investments are distorted away from long-term projects. The value of life-years at stake appears large. We analyze three potential policy responses: surrogate (non-mortality) clinicaltrial endpoints, targeted R&D subsidies, and patent design.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Innovation and Institutional Ownership
By Philippe Aghion, John Van Reenen, ...
-
Innovation and Institutional Ownership
By Philippe Aghion, John Van Reenen, ...
-
Innovation and Institutional Ownership
By Philippe Aghion, John Van Reenen, ...
-
Innovation and Incentives: Evidence from Corporate R&D
By Julie Wulf and Josh Lerner
-
Innovation and Incentives: Evidence from Corporate R&D
By Julie Wulf and Josh Lerner
-
Tolerance for Failure and Corporate Innovation
By Xuan Tian and Tracy Yue Wang
-
By Viral V. Acharya, Ramin Baghai, ...
-
By Viral V. Acharya, Ramin Baghai, ...