Multi-product firms and product switching
By: Andrew B. Bernard, Stephen J. Redding and Peter K. Schott
Contributors: Redding, Stephen; Schott, Peter K.; London School of Economics and Political Science. Centre for Economic Performance
Series: CEP discussion paper -- no. 736
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Published: 2006
Place of publication: London
Language: eng
Format: [electronic resource] /
Description: This paper examines the frequency, pervasiveness and determinants of product switching among U.S. manufacturing firms. We find that two-thirds of firms alter their mix of five-digit SIC products every five years, that one-third of the increase in real U.S. manufacturing shipments between 1972 and 1997 is due to the net adding and dropping of products by survivors, and that firms are more likely to drop products which are younger and have smaller production volumes relative to other firms producing the same product. The product-switching behavior we observe is consistent with an extended model of industry dynamics emphasizing firm heterogeneity and self-selection into individual product markets. Our findings suggest that product switching contributes towards a reallocation of economic activity within firms towards more productive uses.
Notes: Title from PDF file (viewed on Sept. 26, 2006).

"August 2006."

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