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Research and development expenditure in regulated and unregulated markets
Author(s) -
De Villiers J. U.,
Scott D. R.
Publication year - 1986
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090070308
Subject(s) - profit (economics) , industrial organization , economics , new product development , business , product (mathematics) , microeconomics , marketing , geometry , mathematics
This paper examines research and development (R and D) expenditure by firms supplying a product to both a regulated and an unregulated market. An expression for the profit‐maximizing R and D expenditure of firms operating in a dualistic market is derived from theory. This relationship is empirically tested with data from the South African pharmaceutical industry, which did not disprove the theory. The study finds the retention of the unregulated market for pharmaceuticals to be essential to provide R and D funds for the pharmaceutical industry.