Multi-Product Firms and Trade Liberalization

Andrew Bernard, Stephen Redding and Peter Schott

No 12782, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a general equilibrium model of multi-product firms and analyzes their behavior during trade liberalization. Firm productivity in a given product is modeled as a combination of firm-level "ability" and firm-product-level "expertise", both of which are stochastic and unknown prior to the firm's payment of a sunk cost of entry. Higher firm-level ability raises a firm's productivity across all products, which induces a positive correlation between a firm's intensive (output per product) and extensive (number of products) margins. Trade liberalization fosters productivity growth within and across firms and in aggregate by inducing firms to shed marginally productive products and forcing the lowest-productivity firms to exit. Though exporters produce a smaller range of products after liberalization, they increase the share of products sold abroad as well as exports per product. All of these adjustments are shown to be relatively more pronounced in countries' comparative advantage industries.

JEL-codes: F12 F13 L1 (search for similar items in EconPapers)
Date: 2006-12
New Economics Papers: this item is included in nep-int
Note: IO ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (102)

Published as Bernard, Andrew, Stephen Redding and Peter K. Schott. "Multi-Product Firms and Trade Liberalization." The Quarterly Journal of Economics (2011) 126 (3): 1271-1318.

Downloads: (external link)
http://www.nber.org/papers/w12782.pdf (application/pdf)

Related works:
Journal Article: Multiproduct Firms and Trade Liberalization (2011)
Working Paper: Multi-Product Firms and Trade Liberalization (2009)
Working Paper: Multi-product Firms and Trade Liberalization (2007)
Working Paper: Multi-Product Firms and Trade Liberalization (2006)
Working Paper: Multi-product firms and trade liberalization (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:12782

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w12782

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().