The Dynamics of Multinationals Expansion in the European Pharmaceutical Industry (DRAFT)
نویسندگان
چکیده
This paper avails of the multinational-level Amadeus dataset to study the dynamics of the European pharmaceutical industry in the Single Market Programme era: 1990-2004. Our unit of investigations are multinationals that every period decide whether to expand or not, by capturing at least one of the arisen opportunities. By using a dynamic panel probit approach with unobserved heterogeneity we show that the industry presents a positive persistent pattern over time. Comparisons of traditional and Bayesian econometrics provide robustness to this result. Besides that, we exploit a parametric copula technique to relate the history of multinationals binary decisions to their resulting size (measured either as number of subsidiaries acquired or as operational revenues). An important byproduct of this procedure is that we can use both the primitives of our dynamic probit estimations and the simulations derived from the copula procedure to predict the probability each firm expands each subsequent period. We employ our predictions both to choose the best dynamic probit approach and to check how this fits into Sutton’s lower bound measure of market concentration. K : Bayesian and Classic Econometrics, Dynamic Entry, Multinational Growth, Pharmaceutical Industry, Single Market Programme. JEL classifiers: C01, C11, C23, L10, L65. Corresponding author: +31-50-363-3789. Email: [email protected]. Funding from Marie Curie Excellence Grant MEXT-CT-2006-042471 is gratefully aknowledged. A grant from DEPFA BANK PLC is gratefully aknowledged.
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