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The impact of submarket concentration in the US pharmaceutical industry in 1987-1998

Francesca Di Iorio and Letizia Giorgetti ()
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Letizia Giorgetti: Department of Economics, Management and Quantitative Methods, University of Milano

No 163, DEM Working Papers Series from University of Pavia, Department of Economics and Management

Abstract: Global market concentration is the result of the interplay of different sub-markets. According to this view, empirical analysis on the role of concentration as an incentive or as a barrier to entry must be conducted on a sub-market level, where the sub-markets are identified as specific technological trajectories. In this paper we investigate the role of 3-digit submarket concentration in the US pharmaceutical sector in 1987-1998. We take into account several sources of potential entry deterrence including the relative company size to the largest incumbent firm and the number of competing products in each submarket. The estimates of a panel logit model show that a concentrated industry at submarket level seems to act like a barrier to entry. The relative company size is not significant while the number of competing products is significantly positive.

Keywords: submarket concentration; pharmaceuticals; product launches; logit (search for similar items in EconPapers)
JEL-codes: L25 L65 C23 C25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-dcm and nep-knm
Date: 2018-06
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