From 1997 to 2001 the number of Nonemployer businesses, mostly Partnerships, grows faster than Conventional Firms in the USA, a country with the mildest asymmetries between the two types of enterprise with respect to taxation, administrative entry barriers and other institutional aspects. Partnerships are smaller than Conventional Firms and their different speed of net entry may be due to the internal organisation that makes them swifter and better equipped for fast growing industries. In a continuous time stochastic environment, with sunk costs, we model entry as a growth option. Partnerships and Conventional Firms display specific patterns in terms of output price and size since they appear to react in diverse fashions to market uncertainty. In most cases, the Partnership is less risky and better suited to enter under conditions of high volatility, as between 1997 and 2001 in the USA.
Entry Strategies of Partnerships Vs. Conventional Firms
MORETTO, MICHELE;
2008
Abstract
From 1997 to 2001 the number of Nonemployer businesses, mostly Partnerships, grows faster than Conventional Firms in the USA, a country with the mildest asymmetries between the two types of enterprise with respect to taxation, administrative entry barriers and other institutional aspects. Partnerships are smaller than Conventional Firms and their different speed of net entry may be due to the internal organisation that makes them swifter and better equipped for fast growing industries. In a continuous time stochastic environment, with sunk costs, we model entry as a growth option. Partnerships and Conventional Firms display specific patterns in terms of output price and size since they appear to react in diverse fashions to market uncertainty. In most cases, the Partnership is less risky and better suited to enter under conditions of high volatility, as between 1997 and 2001 in the USA.
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