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Entry and Patents: Evidence from the US Cardiovascular Pharmaceutical Sector

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  • Francesca DI IORIO
  • Maria Letizia GIORGETTI

Abstract

The goal of this study is to analyze the impact of innovation on entry, that is, the launch of a new product, for some specific three digit cardiovascular sector in the US pharmaceutical market, for the period 1988-1998. We have a panel data obtained by crossing-check IMS Health Data on sales with data on patents for companies selling products into those submarkets. We estimate a logit panel model by controlling for endogeneity, adopting submarket and firm specific variables. Our results show that own patents don’t clearly encourage entry, while patent holdings by incumbents have contrasting effects: on one hand the initial stock act as a barrier to entry, on the other hand they promote entry through the opening of new technological opportunities.

Suggested Citation

  • Francesca DI IORIO & Maria Letizia GIORGETTI, 2017. "Entry and Patents: Evidence from the US Cardiovascular Pharmaceutical Sector," Departmental Working Papers 2017-07, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2017-07
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    More about this item

    Keywords

    Entry; Patents; Panel data; Logit model; Random effects;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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