Multiple-product firms and product switching

Andrew Bernard, Stephen Redding and Peter Schott

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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

Keywords: ISI; manufacturing plants; market structure; dynamics; industry; reallocation; exit; selection; turnover; growth; output (search for similar items in EconPapers)
JEL-codes: L11 L21 L25 L60 (search for similar items in EconPapers)
Date: 2010-03
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Citations: View citations in EconPapers (358)

Published in American Economic Review, March, 2010, 100(1), pp. 70-97. ISSN: 0002-8282

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Journal Article: Multiple-Product Firms and Product Switching (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:27861

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