Firms in Product Space: Adoption, Growth and Competition

Luca Macedoni, John Morrow and Vladimir Tyazhelnikov

No 18800, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Which products are potentially produced together? When demand for a product increases, which firms will supply it? Using multi-product production patterns within and across firms, we recover a continuous cost based distance between firms and unproduced products. Higher product distance implies decreasing adoption frequency. When export demand induces domestic product adoption, closer firms provide this supply. Potential costs imply measures of Revenue and Competition Potential. These predict firm sales growth, scope growth and core focus. If all firms produced all products linked by co-production, consumer welfare would increase by 10-30%.

Keywords: Multi-product; firms (search for similar items in EconPapers)
JEL-codes: D2 F1 L1 L23 L25 (search for similar items in EconPapers)
Date: 2024-02
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Working Paper: Firms in product space: Adoption, growth and competition (2024)
Working Paper: Firms in Product Space: Adoption, Growth and Competition (2024)
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