Who Can Produce What? Firm Capabilities and Product Entry

Luca Macedoni, John Morrow and Vladimir Tyazhelnikov

No 13044, CESifo Working Paper Series from CESifo

Abstract: Which firms supply which products? Modeling multi-product firms under heterogeneous markups, we recover firms' costs for produced products and develop an algorithm inspired by recommender systems to predict costs for unproduced products. Lower predicted costs imply increased product adoption and identify which firms enter when export demand rises, including firms crossing broad product classifications. We use these counterfactual costs to quantify how reductions in fixed and marginal costs induce product entry and lower price indices. In a price-stabilization exercise following a cost shock, entry subsidies can cost less than subsidies to incumbents, particularly for smaller shocks when capable potential entrants remain available.

Keywords: multi-product firms; firm capabilities; classification; industrial policy (search for similar items in EconPapers)
JEL-codes: D2 F1 F6 L1 (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ifo.de/DocDL/cesifo1_wp13044.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_13044

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().