What drives new firms into an industry? An integrative model of entry

Natália Barbosa ()

No 23, Working Papers from Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho

Abstract: 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.

Keywords: entry; firms' heterogeneity; manufacturing; panel count data models (search for similar items in EconPapers)
JEL-codes: C23 C25 L10 L60 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ent and nep-tid
Date: 2003-10
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