Brian F. Lavoie and Ian M. Sheldon
The Ohio State University
Comparative advantage based on resource endowments cannot explain United States (US) leadership in biotechnology. Sources of heterogeneity within the process of research and development (R&D;) investment, such as international differences in the maximum per-period rate of investment and regulatory uncertainty, offer a plausible explanation that can be incorporated into a real options approach to investment.
Key words: Biotechnology; comparative advantage; R&D; real options.