Globalization and Multiproduct Firms

Volker Nocke and Stephen Yeaple

No 9037, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We present an international trade model of multiproduct firms where firms differ in their endowment of managerial resources and in how effectively these resources can be used in making production more efficient. The model gives rise to a trade-off between conglomerate and specialization strategies of firms, yielding testable predictions on the relationship between firm size, scope and productivity. More efficient firms become exporters, but not all exporters are large and not all large firms export. Following a trade liberalization, non-exporters experience a fall in their market-to-book ratio and consolidate the number of products they manage to lower their marginal costs while the opposite holds for exporters.

Keywords: Diversification discount; Firm heterogeneity; Multiproduct firms; Productivity; Trade liberalization (search for similar items in EconPapers)
JEL-codes: F12 F15 (search for similar items in EconPapers)
Date: 2012-07
New Economics Papers: this item is included in nep-bec and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: GLOBALIZATION AND MULTIPRODUCT FIRMS (2014)
Working Paper: Globalization and multiproduct firms (2013)
Working Paper: Globalization and Multiproduct Firms (2013)
Working Paper: Globalization and Multiproduct Firms (2013)
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