Economy of scales in R&D with block-busters

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dc.creatorSornette, D.
dc.date2000-01-31
dc.date.accessioned2026-07-07T12:06:26Z
dc.date.available2026-07-07T12:06:26Z
dc.descriptionAre large scale research programs that include many projects more productive than smaller ones with fewer projects? This problem of economy of scale is particularly relevant for understanding recent mergers in particular in the pharmaceutical industry. We present a quantitative theory based on the characterization of distributions of discounted sales S resulting from new products. Assuming that these complementary cumulative distributions have fat tails with approximate power law structure S^{-a}, we demonstrate that economy of scales are automatically realized when the exponent a is less than one. Empirical evidence suggests that the exponent a is approximately equal to 2/3 for the pharmaceutical industry.
dc.description10 pages
dc.identifierhttps://arxiv.org/abs/cond-mat/0001434
dc.identifierhttp://arxiv.org/abs/cond-mat/0001434
dc.identifierQuantitative Finance 2, 224--227 (2002)
dc.identifier.urihttp://salesiana.dossiersoluciones.com/handle/123456789/208654
dc.subjectStatistical Mechanics
dc.subjectGeneral Finance
dc.titleEconomy of scales in R&D with block-busters
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