Diversification by entry into a new submarket? |
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Authors: | Gianni Amisano |
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Institution: | DG-Research, European Central Bank, Dipartimento di Scienze Economiche , Università di Brescia , Brescia , Italy |
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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. |
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Keywords: | entry diversification Bayesian inference panel data probit model random effects |
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