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Demand and Supply Side Linkages in Exporting Multiproduct Firms

Author

Listed:
  • Eckel, Carsten
  • Flach, Lisandra
  • Meng, Ning

Abstract

Products produced by a multiproduct firm can be linked through demand linkages or supply linkages. On the demand side, changes in the price of one product can affect the demand for a firm's other products through shifts in consumer expenditures. This is commonly referred to as the cannibalization effect. On the supply side, joint inputs can create a dependency of one product's marginal costs on the output of other products. The existence of these linkages is important for how firms respond to shocks and has major implications for several performance measures, such as productivity and markups. This paper provides first empirical evidence for the existence of cannibalization linkages in presence of supply linkages, which is implied evidence for market power.

Suggested Citation

  • Eckel, Carsten & Flach, Lisandra & Meng, Ning, 2023. "Demand and Supply Side Linkages in Exporting Multiproduct Firms," CEPR Discussion Papers 18627, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18627
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    More about this item

    Keywords

    Multiproduct firms; Cannibalization effect; Demand Linkages; Supply Linkages; Anti-dumping Duties; quality adjustment; Mark-ups;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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