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Size Metrics and Dynamics of Firms Expansion in the European Pharmaceutical Industry

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Author Info

  • Franco Mariuzzo

    (UCD Geary Institute, University College Dublin, Ireland)

  • Xiaoheng Zhang

    (Economic and Social Research Institute, Dublin, Ireland)

Abstract

We generalize the growth-of-firm literature by linking alternative metrics of size via a Copula approach. We look at the result of the fitted Copula and justify the metric we base our analysis upon. We employ the Amadeus dataset and investigate the growth dynamics of the European pharmaceutical industry in the Single Market Programme era, 1990–2004. Relying on a set of dynamic panel Probit methods that deal with unobserved heterogeneity and initial conditions, we analyze how our units of investigation, multinationals, capture opportunities over time. We find strong evidence of state dependence and mean reversion, as predicated by the theory of maturation — firms face a period of rapid growth, followed by a slow down, or even a stop, in growth. We finish off our exercise by conditioning the fitted Copula on the predicted measure of size and simulate the remaining measures.

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File URL: http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201037.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Geary Institute, University College Dublin in its series Working Papers with number 201037.

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Length: 45 pages
Date of creation: 07 Sep 2010
Date of revision:
Handle: RePEc:ucd:wpaper:201037

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Related research

Keywords: Copula; Dynamic Nonlinear Panel Data Models; Entry; Firms Growth; Lower Bound; Pharmaceutical Industry; Single Market Programme; Unobserved Heterogeneity;

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