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Multiple-product firms and product switching

By Andrew B. Bernard, Stephen Redding and Peter K. Schott


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 us

Topics: HD Industries. Land use. Labor
Publisher: American Economic Association
Year: 2010
DOI identifier: 10.1257/aer.100.1.70
OAI identifier:
Provided by: LSE Research Online

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