Rewarding inventors with inefficient monopoly power has long been regarded as the price of encouraging innovation. Public prescription drug insurance escapes that trade-off and achieves an elusive goal: lowering static deadweight loss, while simultaneously encouraging dynamic investments in...

"Despite significant recent progress, there is still one major issue facing the pharmaceutical industry that dwarfs all others -- the price of drugs, which is a unifying factor on both partisan sides in US politics. The pharmaceutical industry shouldn't be surprised by the backlash given that...

This study sets up a compound option approach for evaluating pharmaceutical R&D investment projects in the presence of technical and economic uncertainties. Technical uncertainty is modeled as a Poisson jump that allows for failure and thus abandonment of the drug development. Economic...