What drives new firms into an industry? An integrative model of entry
The paper focuses on the theoretical and empirical formulation of an entry model that integrates strategic considerations and firms' heterogeneity. Entry decisions are derived from a profit function, and, subsequently, the number of entrants is defined as the sum of firms that have effectively decided to enter a given industry. As the aggregation of individual entry decisions yields a discrete outcome, the econometric methodology is based on panel count data models, rendering a novel departure from previous works. The results suggest that both incumbents' behaviour towards entry and firm-specific characteristics provide additional and interesting insights in understanding entry.
|Date of creation:||Oct 2003|
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- Kessides, Ioannis N, 1990. "Towards a Testable Model of Entry: A Study of the U.S. Manufacturing Industries," Economica, London School of Economics and Political Science, vol. 57(226), pages 219-238, May.
- Ghemawat, Pankaj, 1987. "Investment in lumpy capacity," Journal of Economic Behavior & Organization, Elsevier, vol. 8(2), pages 265-277, June.