Endogenous Product Scope: Market Interlacing and Aggregate Business Cycle Dynamics

Oscar Pavlov and Mark Weder

Economics Working Papers from Department of Economics and Business Economics, Aarhus University

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)
Pages: 25
Date: 2021-01-06
New Economics Papers: this item is included in nep-bec and nep-mac
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https://repec.econ.au.dk/repec/afn/wp/21/wp21_01.pdf (application/pdf)

Related works:
Journal Article: Endogenous product scope: Market interlacing and aggregate business cycle dynamics (2022)
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:aah:aarhec:2021-01

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