Multi-product firms and product switching

Bernard, Andrew B., Redding, Stephen and Schott, Peter K. (2006) Multi-product firms and product switching. CEP Discussion Papers (CEPDP0736). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

This paper examines the frequency, pervasiveness and determinants of product switching among U.S. manufacturing firms. We find that two-thirds of firms alter their mix of five-digit SIC products every five years, that one-third of the increase in real U.S. manufacturing shipments between 1972 and 1997 is due to the net adding and dropping of products by survivors, and that firms are more likely to drop products which are younger and have smaller production volumes relative to other firms producing the same product. The product-switching behavior we observe is consistent with an extended model of industry dynamics emphasizing firm heterogeneity and self-selection into individual product markets. Our findings suggest that product switching contributes towards a reallocation of economic activity within firms towards more productive uses.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2006 The Author(s)
Divisions:	LSE Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor
JEL classification:	L - Industrial Organization > L6 - Industry Studies: Manufacturing > L60 - General E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E23 - Production L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure; Size Distribution of Firms D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior
Date Deposited:	03 Mar 2008
Last Modified:	13 Sep 2024 20:01
URI:	http://eprints.lse.ac.uk/id/eprint/3687

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