An Integrative Model of Firms’ Entry Decisions
AbstractThe paper presents a tractable empirical entry model that integrates strategic considerations and firms’ heterogeneity. Individual entry decisions are derived from a profit function and are specified as the outcome of a discrete game among potential entrants. Using data from a set of Portuguese manufacturing industries over a 6-years period, the estimation of the reduced form of the entry model is based on panel count data models, rendering a novel departure from previous works. The results suggest that both incumbents’ behaviour towards entry and firm-specific characteristics provide additional and interesting insights in understanding entry. Specifically, entrants choose the structure of their labour force as an important firm-specific resource. We also find that industry structure matters greatly.
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Bibliographic InfoArticle provided by Duncker & Humblot, Berlin in its journal Applied Economics Quarterly.
Volume (Year): 53 (2007)
Issue (Month): 1 ()
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Web page: http://www.duncker-humblot.de
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
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- Manjón Antolín, Miguel C., 2004.
"Firm Size and Short-Term Dynamics in Aggregate Entry and Exit,"
2072/1778, Universitat Rovira i Virgili, Department of Economics.
- Manjón-Antolín, Miguel C., 2010. "Firm size and short-term dynamics in aggregate entry and exit," International Journal of Industrial Organization, Elsevier, vol. 28(5), pages 464-476, September.
- Manjon, M.C., 2004. "Firm Size and Short-Term Dynamics in Aggregate Entry and Exit," Discussion Paper 2004-2, Tilburg University, Center for Economic Research.
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