Firms in Product Space: Adoption, Growth and Competition

Luca Macedoni, John Morrow and Vladimir Tyazhelnikov

No 18800, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Which products are potentially produced together? When demand for a product increases, which firms will supply it? Using multi-product production patterns within and across firms, we recover a continuous cost-based distance between firms and unproduced products. Higher product distance implies decreasing adoption frequency. When export demand induces domestic product adoption, closer firms provide this supply. Potential costs imply measures of Revenue and Competition Potential. These predict firm sales and scope growth. If all firms produced all products linked by co-production, consumer welfare could increase by 16-30% under constant markups, rising to 46-86% under variable markups.

Keywords: Multi-product firms; Variable markups; Firm capabilities; Classification (search for similar items in EconPapers)
JEL-codes: D2 F1 L1 L23 L25 (search for similar items in EconPapers)
Date: 2024-02
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Related works:
Working Paper: Firms in product space: Adoption, growth and competition (2024)
Working Paper: Firms in Product Space: Adoption, Growth and Competition (2024)
Working Paper: Firms in product space: adoption, growth and competition (2024)
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