Entry by diversified firms into German industries |
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| Institution: | 1. University Institute of Pharmaceutical Sciences, UGC Centre of Advanced Studies, Panjab University, Chandigarh 160 014, India;2. Centre for Pharmaceutical Nanotechnology, Department of Pharmaceutics, National Institute of Pharmaceutical Education and Research (NIPER), Mohali, Punjab 160 062, India;3. UGC-Centre of Excellence in Applications of Nanomaterials, Nanoparticles and Nanocomposites (Biomedical Sciences), Panjab University, Chandigarh 160 014, India;1. Department of Economics, The College of William and Mary, Williamsburg VA 23187, USA;2. CAPP, Center for Administration and Public Policies, Universidade de Lisboa, Portugal;3. ISCSP, Institute of Social and Political Sciences, Universidade de Lisboa, R. Almerindo Lessa, 1300-663 Lisboa, Portugal |
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| Abstract: | The paper describes the entry behaviour of diversifying Firms in the German manufacturing sector. The econometric analysis leads to the result that firms enter new markets if (1) the expected rate of return is higher than in other comparable markets, (2) the market is growing, and (3) the accumulated know-how can be transferred profitably to the new market. The incentive to enter other markets will be reduced by entry barriers like economies of scale, product differentiation, and market risk. It is interesting to note that if the market provides room for all firms, then entry deterrence strategies are less likely to be adopted by incumbent firms. |
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