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Entry and submarket concentration: empirical evidence from the pharmaceutical industry

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  • Maria Letizia Giorgetti

Abstract

The paper investigates the decisions of companies to enter new submarkets, analyzing the relationship between submarket concentration and entry through the explanatory power of submarkets. The relationship is analyzed both at the aggregate level for all countries and both at the country-specific level using a pharmaceutical company dataset gathered in seven countries in the 1987-1998 period. A Bayesian panel probit model enables us to measure entry into a new submarket using the lagged dependent variable to incorporate potential state persistence. The results obtained at the submarket level indicate a negative correlation between concentration and entry by diversification, although previous literature at market level has indicated conflicting results for the same relationship.

Suggested Citation

  • Maria Letizia Giorgetti, 2012. "Entry and submarket concentration: empirical evidence from the pharmaceutical industry," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2012(3), pages 5-29.
    • Handle: RePEc:fan:polipo:v:html10.3280/poli2012-003001
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    Citations

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    Cited by:

    1. Francesca Di Iorio & Maria Letizia Giorgetti, 2018. "The impact of submarket concentration in the US pharmaceutical industry in 1987-1998," DEM Working Papers Series 163, University of Pavia, Department of Economics and Management.
    2. Francesca DI IORIO & Maria Letizia GIORGETTI, 2017. "A Deeper Analysis on Pharmaceutical Submarket Concentration: the US market in 1987-1998," Departmental Working Papers 2017-02, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.

    More about this item

    Keywords

    Ingresso; diversificazione; dati panel; modello probit; effetti random;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • 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; Probabilities

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