How does regulation affect beliefs ? Stock Market valuation of Orphan Drug Regulatory Approvals: (112th 2016 APSA Annual Meeting)

1st lines: 1. Regulation and Industry Change: reversing cause and effect The link between the evolution of regulatory institutions and the development of new schemes for value creation within an industry (i.e, its business model) has most often been studied from the angle of how sectorial change has affected the institutionalization of new policy instruments. More precisely, the line of questioning generally adopted has been whether or not political actors have sought to simply follow long term trends within an industrial sector - e.g., technological breaks or the evolving structure of innovation (Aghion and Howitt 1992), its exogenous conditions (Kane 1981) and more recently, economic crisis (Tirole 2012) - by creating an appropriate regulatory framework, consistent with the new environment in which private actors operate. If bureaucrats or politicians appear to have failed to ensure that new processes of value creation are translated into regulatory institutions that match the dynamics of the sector in question, other scholars regularly allege the capture of the political process by interest groups (Carpenter and Moss 2014)