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Diversification by entry into a new submarket?

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  • Gianni Amisano
  • Maria Letizia Giorgetti

Abstract

Using a dataset on the subsector and geographical segmentation of 208 Pharmaceutical companies, a Bayesian panel probit is used to analyze the role of state dependency, size and achieved diversification in affecting entry decision. We properly account for unobservable heterogeneity in a context with nonstrictly exogenous regressors. We find that achieved diversification, measured by the number of submarkets already entered affects negatively the probability of entry. Beside some country-specific exceptions, size and the lagged dependent variable do not seem to be relevant.

Suggested Citation

  • Gianni Amisano & Maria Letizia Giorgetti, 2013. "Diversification by entry into a new submarket?," Applied Economics, Taylor & Francis Journals, vol. 45(12), pages 1507-1518, April.
    • Handle: RePEc:taf:applec:45:y:2013:i:12:p:1507-1518
    DOI: 10.1080/00036846.2011.628297
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    3. Geroski, Paul A, 1999. "The Growth of Firms in Theory and in Practice," CEPR Discussion Papers 2092, C.E.P.R. Discussion Papers.
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