Demand and Supply Side Linkages in Exporting Multiproduct Firms

Carsten Eckel, Lisandra Flach and Ning Meng
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Lisandra Flach: LMU Munich, ifo Institute, CESifo, CEPR
Ning Meng: Nanjing University, CESifo

No 456, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Products produced by a multiproduct firm can be linked through demand linkages or supply linkages. On the demand side, changes in the price of one product can affect the demand for a firm's other products through shifts in consumer expenditures. This is commonly referred to as the cannibalization effect. On the supply side, joint inputs can create a dependency of one product's marginal costs on the output of other products. The existence of these linkages is important for how firms respond to shocks and has major implications for several performance measures, such as productivity and markups. This paper provides first empirical evidence for the existence of cannibalization linkages in presence of supply linkages, which is implied evidence for market power.

Keywords: multiproduct firms; cannibalization effect; demand linkages; supply linkages; anti-dumping tariffs; quality; mark-ups (search for similar items in EconPapers)
JEL-codes: D21 D24 F12 F13 F14 L11 L15 L25 (search for similar items in EconPapers)
Date: 2023-11-17
New Economics Papers: this item is included in nep-bec, nep-com, nep-eff, nep-ind and nep-int
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