Multi-Product Firms

5 Empirical Regularities related to MULTI-PRODUCT FIRMS ?

1. Sales are highly concentrated in core products.

2. More productive firms produce and export more products.

3. Product switching (churning) is frequent within firms.

4. Trade liberalization induces product pruning.

5. New export varieties start small and often exit quickly.

What is product CHURNING?

Frequent adding and dropping of products within firms over time.

What is product PRUNING after trade liberalization?

Firms drop their least profitable or lowest-demand products due to increased competition.

How do new export products typically behave?

They start with small export volumes and face high exit rates.

What do GRAVITY RESULTS show for multi-product firms?

As Distance increases, the number of exporting firms and products FALLS; Distance affects trade mainly through the EXTENSIVE MARGIN.

What is the relationship between EXTENSIVE and INTENSIVE MARGINS?

The Extensive Margin is financed by the Intensive Margin; strong core products support product and market expansion.

What does the CUTOFF condition represent?

The MINIMUM PROFITABILITY THRESHOLD that determines whether a product is produced; products below the cutoff are dropped.

How does Trade Liberalization affect CUTOFFS?

By increasing competition, it raises Product-Level Cutoffs, leading to the elimination of marginal products.

According to Bernard, Redding and Schott, where do productivity gains come from besides firm entry and exit?

Productivity gains arise NOT ONLY from Firm Entry and Exit, but also from Within-Firm Product Switching among surviving firms.

How does Javorcik (2010) explain post-NAFTA EXPORT GROWTH?

Export growth is driven by Within-Firm Product Experimentation, Learning, and Selection under uncertainty.