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

Author

Listed:
  • Francesca Di Iorio

    (Department of Epolitical Sciences, University of Naples Federico II)

  • Maria Letizia Giorgetti

    (Department of Economics, Management and Quantitative Methods, University of Milano)

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.

Suggested Citation

  • Francesca Di Iorio & Maria Letizia Giorgetti, 2018. "The impact of submarket concentration in the US pharmaceutical industry in 1987-1998," DEM Working Papers Series 163, University of Pavia, Department of Economics and Management.
    • Handle: RePEc:pav:demwpp:demwp0163
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    File URL: http://dem-web.unipv.it/web/docs/dipeco/quad/ps/RePEc/pav/demwpp/DEMWP0163.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    submarket concentration; pharmaceuticals; product launches; logit;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • 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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