Product recalls, market size and innovation in thepharmaceutical industry
How does market size impact on innovation? In this article we dig into this fundamental issue in the context of Pharmaceutical Industry. Several issues arose in the literature concerning the reverse causality of market size to innovation. In the following, we try to overcome the latter endogeneity problem through a novel instrument namely, pharmaceutical recalls of drugs. How does market size impact on market innovation? Back in 2004, Acemoglu, Linn (2004) tried to instrument