Endogenous product scope: Market interlacing and aggregate business cycle dynamics

Oscar Pavlov and Mark Weder

European Economic Review, 2022, vol. 148, issue C

Abstract: This paper examines a market interlacing industry configuration in general equilibrium with multi-product firms. In contrast to previous studies which utilize market segmentation, firms produce multiple products even in the complete absence of the love of variety. Product scopes are procyclical and entry and exit of firms generates an endogenous amplification mechanism. When simulated by shocks derived from the efficiency and labor wedges, the model replicates the changes in dynamics between the pre- and post 1983 periods, and explains the hours-productivity puzzle.

Keywords: Multi-product firms; Business cycles (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Date: 2022
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Working Paper: Endogenous Product Scope: Market Interlacing and Aggregate Business Cycle Dynamics (2021)
Working Paper: Endogenous product scope: Market interlacing and aggregate business cycle dynamics (2021)
Working Paper: Endogenous product scope: Market interlacing and aggregate business cycle dynamics (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:148:y:2022:i:c:s0014292122001441

DOI: 10.1016/j.euroecorev.2022.104243

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