Competition, Information Acquisition and Disclosure: Evidence from the Pharmaceutical Industry

Abstract

I investigate how competition shapes the incentives for pharmaceutical firms to acquire and disclose information on the quality of their drugs. I have constructed a unique dataset describing the clinical trials and the medical publications for all drugs that have been developed or marketed in the US. I aim to estimate the causal e.ect of competition on firms' clinical testing e.ort and drug related publications. Preliminary results suggest that the intensity of competition is positively correlated with the level of testing e.ort and the amount of information disclosed. I plan on developing a disclosure game featuring costly information acquisition and competition in a vertically differentiated market to rationalize my empirical results.