ENTRY INTO PHARMACEUTICAL SUBMARKETS: A BAYESIAN PANEL PROBIT ANALYSIS
Article first published online: 10 AUG 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Journal of Applied Econometrics
Themed Issue: Themes in Applied Microeconometrics
Volume 28, Issue 4, pages 667–701, June/July 2013
How to Cite
Amisano, G. and Giorgetti, M. L. (2013), ENTRY INTO PHARMACEUTICAL SUBMARKETS: A BAYESIAN PANEL PROBIT ANALYSIS. J. Appl. Econ., 28: 667–701. doi: 10.1002/jae.2267
- Issue published online: 25 APR 2013
- Article first published online: 10 AUG 2012
- Manuscript Revised: 22 AUG 2011
- Manuscript Received: 15 JAN 2007
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. Copyright © 2012 John Wiley & Sons, Ltd.