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Firms in Product Space: Adoption, Growth and Competition

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  • Macedoni, Luca
  • Morrow, John
  • Tyazhelnikov, Vladimir

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%.

Suggested Citation

  • Macedoni, Luca & Morrow, John & Tyazhelnikov, Vladimir, 2024. "Firms in Product Space: Adoption, Growth and Competition," CEPR Discussion Papers 18800, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:18800
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    More about this item

    Keywords

    Multi-product firms;

    JEL classification:

    • F1 - International Economics - - Trade
    • D2 - Microeconomics - - Production and Organizations
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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