A transaction costs analysis of innovations in the organization of pharmaceutical R & D
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TL;DR
It is shown that market failures related to long-term joint-venture R&D contracts between firms and university laboratories are less significant than appears at first and may account for their striking increase over the past fifteen years.
Abstract
This paper uses transaction costs economics to analyze the increasing importance of vertical disintegration of R&D by large pharmaceutical and chemical firms. First, it discusses three characteristics of the research-based pharmaceutical industry. Then, it shows that market failures related to long-term joint-venture R&D contracts between firms and university laboratories are less significant than appears at first and may account for their striking increase over the past fifteen years.