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Innovation Incentives under Transferable Fast‐Track Regulatory Review
Author(s) -
Gans Joshua S.,
Ridley David B.
Publication year - 2013
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12026
Subject(s) - voucher , track (disk drive) , incentive , competition (biology) , fast track , empirical evidence , public economics , business , computer science , economics , industrial organization , microeconomics , accounting , ecology , bioinformatics , philosophy , epistemology , biology , operating system
Under a 2007 U.S. law, the developer of a treatment for a neglected disease is rewarded with a fast‐track voucher that can be sold to another developer. Similar fast‐track vouchers are being offered by other agencies. We model how the existence of transferable, fast‐track vouchers can impact innovation for both humanitarian and other products, and can create competition between otherwise unrelated pursuits. We consider the tradability of fast‐track vouchers and map these to innovation race outcomes. Our analysis highlights areas for further exploration in policy settings as well as predictions for empirical analysis.