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Multi-product firms, product mix changes and upgrading: Evidence from China's state-owned forest areas

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  • Söderbom, Måns
  • Weng, Qian

Abstract

Product selection matters for a firm's productivity and long-run growth. Recent theoretical and empirical studies indicate that an important margin of adjustment to policy reforms is the reallocation of output within firms through changes in product mix decisions. This paper examines the frequency, pervasiveness and determinants of product-switching and upgrading activities in firms located in China's state-owned forest areas during a period of gradual institutional and managerial reforms (2004–2008). We find that changes to the product mix are pervasive and characterized by adding or churning products rather than only shedding products. Moreover, changes in firms’ product mix have made a significant contribution to the aggregate output growth during our sample period. We also find that firms with different characteristics, human capital and market conditions differ in their propensity to diversify and upgrade product mix.

Suggested Citation

  • Söderbom, Måns & Weng, Qian, 2012. "Multi-product firms, product mix changes and upgrading: Evidence from China's state-owned forest areas," China Economic Review, Elsevier, vol. 23(4), pages 801-818.
  • Handle: RePEc:eee:chieco:v:23:y:2012:i:4:p:801-818
    DOI: 10.1016/j.chieco.2012.04.002
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    Cited by:

    1. Lionel Gérard Fontagné & Angelo Secchi & Chiara Tomasi, 2016. "The Fickle Fringe and the Stable Core: Exporters' Product Mix Across Markets," CESifo Working Paper Series 5889, CESifo Group Munich.
    2. T.V.S.Ramamohan Rao, 2011. "Contemporary Relevance and Ongoing Controversies Related to the CES Production Function," Journal of Quantitative Economics, The Indian Econometric Society, vol. 9(2), pages 36-57, July.
    3. Becker, Dennis, 2014. "Informality among multi-product firms," Working Papers 250009, Cornell University, Department of Applied Economics and Management.

    More about this item

    Keywords

    Multi-product firms; Product mix changes; Product upgrading; Firm characteristics; China's state-owned forest areas;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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