Product Choice and Product Switching

Andrew Bernard, Peter Schott and Stephen Redding

No 9789, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a model of endogenous product selection by firms. The theory is motivated by new evidence we present on the importance of product switching by U.S. manufacturers. Two-thirds of continuing firms change their product mix every five years, and product switches involve more than 40% of firm output and almost half of existing products. The theoretical model incorporates heterogeneous firms, heterogeneous products, and ongoing entry and exit. In equilibrium, firm productivity is correlated with product fixed costs, with the most productive firms choosing to make the products with the highest fixed costs. Changes in market structure result in systematic patterns of firm entry/exit and product switching.

JEL-codes: D1 I1 (search for similar items in EconPapers)
Date: 2003-06
Note: IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Working Paper: Product Choice and Product Switching (2005)
Working Paper: Product Choice and Product Switching (2003)
Working Paper: Product Choice and Product Switching (2003)
Working Paper: Product choice and product switching (2003)
Working Paper: Product Choice and Product Switching (2003)
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