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Partnerships vs. Firms Entry Strategies

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  • Michele Moretto

    ()
    (Università di Padova)

  • Gianpaolo Rossini

    ()
    (Università di Bologna)

Abstract

From 1997 to 2001 we observe a faster growth in the number of Nonemployer businesses (mostly Partnerships) vis-à-vis Firms in the USA, a country with the mildest asymmetries between the two types of enterprise with respect to taxation, administrative entry barriers and other institutional aspects. The different speed of net entry may be due to the internal organisation of the two types of enterprise and its relation to some market features. In a continuous time stochastic environment, with sunk costs, we model entry as a growth option. Partnerships and Firms display speci c entry patterns in terms of output price and size since they react in diverse fashions to market uncertainty. In most cases, the Partnership is less risky and better suited to enter under conditions of high volatility, as during the years between 1997 and 2001.

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Bibliographic Info

Paper provided by Dipartimento di Scienze Economiche "Marco Fanno" in its series "Marco Fanno" Working Papers with number 0049.

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Length: 21 pages
Date of creation: Sep 2007
Date of revision:
Handle: RePEc:pad:wpaper:0049

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Keywords: Entry Strategies; Uncertainty; Partnership; Firm;

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