Globalization and Multiproduct Firms

Nocke, Volker; Yeaple, Stephen (25. August 2013): Globalization and Multiproduct Firms. SFB/TR 15 Discussion Paper No. 408

Abstract

We present an international trade model with multiproduct firms. Firms are heterogeneously endowed with two types of capabilities that jointly determine the trade-off within firms between managing a large portfolio of products and producing at low marginal cost. The model can explain many of the documented cross-sectional correlations in firm performance measures, including why larger firms are more productive and more diversified, and yet more diversified firms trade at a discount. Globalization is shown to induce heterogeneous responses across firms in terms of scope and productivity, some of which are consistent with existing empirical work, while others are potentially testable.

• Item Type: Paper (Discussion Paper)
• Form of publication: Preprint
• Keywords: multiproduct firms, trade liberalization, diversification discount, firm heterogeneity, productivity
• Faculties: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > C5 - Wettbewerbspolitik als Steuerung von Wettbewerbsprozessen
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: F12, F15
• Language: English