> But do we really think that inadequate incentive to create new drugs or new movies is a major problem right now?
I found this line in Krugman's text surprising, because there actually are a lot of questions about incentives in both drug and entertainment markets.
In drugs, pharma companies are focusing on high-margin "lifestyle enhancing" drug categories like erectile dysfunction, blood pressure management, and various mood and mental management. Basically, the drugs that rich healthy people will pay a lot of money for. Pharma companies are not focusing on low-margin but highly useful categories like antibiotics, pests, and vaccines. Basically, the problems that affect poor people in 2nd and 3rd world countries.
In entertainment, companies are focusing on iterating well-known and well-used franchises for which they know they can drive immediate demand with marketing. Highly original hits like Inception are not nearly as common as they were in say, the 1970s or 1980s. Instead we get Furious 7 and a two remakes of 21 Jump Street.
Don't get me wrong, the drug and entertainment industries are making a lot of money. But the issue is how they are making it. Drug companies stick to first world problems because first world countries protect their IP, so that is where they'll get a return. Entertainment companies stick to movies that will pack the theater on opening weekend because the movie will be heavily pirated within a few days after that.
I'm not crying for the poor drug or movie executives. I'm saying that the rest of us have to live with the consequences of how we incentivize companies to do business.
I found this line in Krugman's text surprising, because there actually are a lot of questions about incentives in both drug and entertainment markets.
In drugs, pharma companies are focusing on high-margin "lifestyle enhancing" drug categories like erectile dysfunction, blood pressure management, and various mood and mental management. Basically, the drugs that rich healthy people will pay a lot of money for. Pharma companies are not focusing on low-margin but highly useful categories like antibiotics, pests, and vaccines. Basically, the problems that affect poor people in 2nd and 3rd world countries.
In entertainment, companies are focusing on iterating well-known and well-used franchises for which they know they can drive immediate demand with marketing. Highly original hits like Inception are not nearly as common as they were in say, the 1970s or 1980s. Instead we get Furious 7 and a two remakes of 21 Jump Street.
Don't get me wrong, the drug and entertainment industries are making a lot of money. But the issue is how they are making it. Drug companies stick to first world problems because first world countries protect their IP, so that is where they'll get a return. Entertainment companies stick to movies that will pack the theater on opening weekend because the movie will be heavily pirated within a few days after that.
I'm not crying for the poor drug or movie executives. I'm saying that the rest of us have to live with the consequences of how we incentivize companies to do business.
edit: word fixes