Diversification by entry into a new submarket?
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.
Document Type: Research Article
Affiliations: 1: DG-Research, European Central Bank, Dipartimento di Scienze Economiche,Università di Brescia, Brescia, Italy 2: Dipartimento di Economia,Management e Metodi Quantitativi, Università degli Studi di Milano, Milano, Italy
Publication date: April 1, 2013