Multiple-Product Firms and Product Switching

Andrew Bernard, Stephen Redding and Peter Schott

American Economic Review, 2010, vol. 100, issue 1, 70-97

Abstract: This paper examines the frequency, pervasiveness, and determinants of product switching by US 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 toward their most efficient use. (JEL L11, L21, L25, L60)

JEL-codes: L11 L21 L25 L60 (search for similar items in EconPapers)
Date: 2010
Note: DOI: 10.1257/aer.100.1.70
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Citations: View citations in EconPapers (409)

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