Multi-Product Firms and Product Switching
Andrew B. Bernard
Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)
Stephen J. Redding
Princeton University; London School of Economics (LSE); Centre for Economic Policy Research (CEPR)
Peter K. Schott
Yale University - School of Management; National Bureau of Economic Research (NBER)
August 1, 2008
US Census Bureau Center for Economic Studies Paper No. CES-WP- 08-24
This paper examines the frequency, pervasiveness and determinants of product switching by U.S. manufacturing firms. We find that one-half of firms alter their mix of five-digit SIC products every five years, that product switching is correlated with both firm- and firm-product attributes, and that product adding and dropping induce large changes in firm scope. The behavior we observe is consistent with a natural generalization of existing theories of industry dynamics that incorporates endogenous product selection within firms. Our findings suggest that product switching contributes to a reallocation of resources within firms towards their most efficient use.
Number of Pages in PDF File: 50
Keywords: Heterogeneous firms, Product differentiation, Product market entry and exit
JEL Classification: D21, E23, L11, L60working papers series
Date posted: July 29, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo8 in 0.297 seconds