| This document contains two essays on the application of industrial organization. One uses a unique data set to assess the existing literature on the regulation of pharmaceuticals. The other is more theoretical and attempts to reconcile an apparent gap in the literature regarding competition between rival technologies.; Previous work using incomplete data has identified empirical relationships between the time for the Food and Drug Administration to approve drug applications and the attributes of those applications. Some of this work uses delays in FDA drug approvals to identify the preferences of drug reviewers.; I supplement the existing literature in multiple ways. Using a complete set of generic drug applications, I find general support for the previously established empirical relationships. I also find that using incomplete data may lead to misleading results. I find little support for reviewer preferences being responsible for approval delays. Delays appear to be due to factors associated with both regulator and regulated entity. Firm ability and application quality appear to be important determinants of the time required for application approval.; The second more theoretical paper assesses competition between rival technologies in the presence of indirect network effects. If network effects are strong, users of a less popular technology will switch to a more popular technology, making a popular technology a de facto standard.; Existing literature on this subject has frequently cited the rivalry between the Beta and VHS videocassette tape formats as a useful example of such competition. Ironically, these models in this literature do not explain the demise of the Beta format. Apparently, users of the Beta platform were unable to obtain prerecorded media, despite producers supplying it. A key shortcoming of the literature is that it does not consider intermediaries between producers and consumers.; To describe the behavior of intermediaries, I use a model of “distribution services” from the marketing literature. Under very reasonable circumstances, a profit-maximizing retailer may choose not to carry complementary products for a less popular technology, despite willing consumers. Less popular technologies like Beta tape format can be abandoned if complementary goods have to pass through distribution chokepoints. |
