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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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    References listed on IDEAS

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    1. Martin Biewen, 2004. "Measuring State Dependence in Individual Poverty Status: Are there Feedback Effects to Employment Decisions and Household Composition?," Discussion Papers of DIW Berlin 429, DIW Berlin, German Institute for Economic Research.
    2. Jean O. Lanjouw, 2005. "Patents, Price Controls and Access to New Drugs: How Policy Affects Global Market Entry," Working Papers 61, Center for Global Development.
    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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