Diversification by entry into a new submarket?

Gianni Amisano and Maria Letizia Giorgetti

Applied Economics, 2013, vol. 45, issue 12, 1507-1518

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.

Date: 2013
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DOI: 10.1080/00036846.2011.628297

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