Multi-Product Firms and Product Switching

Andrew Bernard, Stephen Redding and Peter Schott

No 12293, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D21 E23 L11 L60 (search for similar items in EconPapers)
Date: 2006-06
New Economics Papers: this item is included in nep-bec, nep-com, nep-ent, nep-ind and nep-mic
Note: ITI
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Citations: View citations in EconPapers (85)

Published as Bernard, Andrew B., Stephen J. Redding, Peter K. Schott. "Multi-Product Firms and Product Switching." American Economic Review 100(March 2010): 70-97.

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Related works:
Working Paper: Multi-Product Firms and Product Switching (2008)
Working Paper: Multi-Product Firms and Product Switching (2006)
Working Paper: Multi-Product Firms and Product Switching (2006)
Working Paper: Multi-product firms and product switching (2006)
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