Entry and Submarket Concentration: Empirical Evidence from the Pharmaceutical Industry

Maria Giorgetti ()
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Maria Giorgetti: UNIMI - Università degli Studi di Milano = University of Milan, Unicatt - Università cattolica del Sacro Cuore [Milano]

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Abstract: The paper investigates the decisions of companies to enter new submarkets, analyzing the relationship between submarket concentration and entry through the explanatory power of submarkets. The relationship is analyzed both at the aggregate level for all countries and at the country-specific level using a pharmaceutical company dataset gathered in seven countries in the 1987-1998 period. A Bayesian panel probit model enables us to measure entry into a new submarket using the lagged dependent variable to incorporate potential state persistence. The results obtained at the submarket level indicate a negative correlation between concentration and entry by diversification, although previous literature at market level has indicated conflicting results for the same relationship.

Keywords: Entry; Diversification; Bayesian Inference; Panel Data; Probit Model; Random Effects; Diversificazione; Inferenza Bayesiana; Dati Panel; Modello Probit; Effetti Random; Ingresso (search for similar items in EconPapers)
Date: 2013-06
Note: View the original document on HAL open archive server: https://hal.science/hal-03470102
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Published in European Review of Industrial Economics and Policy , 2013, 6

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