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The distinction between the exogenous x and endogenous q is important forthe modelling of managerial decision making and for the interpretation of theregression results. However, our particular assumptions about whether quality andthe numbers of fundholding GPs are endogenous or exogenous are illustrative, notessential. We test for the endogeneity of our quality measure and for the numbersof fundholding GPs in the empirical section.
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