PUBLIC-PRIVATE INTERACTION IN PHARMACEUTICAL RESEARCH

We empirically examine interaction between the public and private sect ors in pharmaceutical research using qualitative data on the drug disc overy process and quantitative data on the incidence of coauthorship b etween public and private institutions. We find evidence of significan t reciprocal interaction, and reject a simple ''linear'' dichotomous m odel in which the public sector performs basic research and the privat e sector exploits it. Linkages to the public sector differ across firm s, reflecting variation in internal incentives and policy choices, and the nature of these linkages correlates with;their research performan ce.