We study entry into pharmaceutical submarkets by using a dynamic panel probit model. We develop a Bayesian version of Wooldridge's approach to dealing with unobserved heterogeneity. We distinguish between greenfield entry (entry with first product) and undifferentiated entry, which may take the form of introducing further products. We extend the standard reduced form model to consider company size in the submarket and across all submarkets. We find that greenfield and undifferentiated entries have different determinants, that global and submarket size measures have different effects and that sunk costs often have positive effects on entry due to a commitment mechanism.
Entry in Pharmaceutical Submarkets:a Bayesian Panel Probit analysis / G. Amisano, M.L. Giorgetti. ((Intervento presentato al 13. convegno Annual INTERNATIONAL INDUSTRIAL ORGANIZATION CONFERENCE tenutosi a Vancouver nel 2010.
Entry in Pharmaceutical Submarkets:a Bayesian Panel Probit analysis
M.L. GiorgettiUltimo
2010
Abstract
We study entry into pharmaceutical submarkets by using a dynamic panel probit model. We develop a Bayesian version of Wooldridge's approach to dealing with unobserved heterogeneity. We distinguish between greenfield entry (entry with first product) and undifferentiated entry, which may take the form of introducing further products. We extend the standard reduced form model to consider company size in the submarket and across all submarkets. We find that greenfield and undifferentiated entries have different determinants, that global and submarket size measures have different effects and that sunk costs often have positive effects on entry due to a commitment mechanism.Pubblicazioni consigliate
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