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

  • Söderbom, Måns

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Weng, Qian

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

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.

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File URL: http://hdl.handle.net/2077/28585
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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 525.

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Length: 46 pages
Date of creation: 09 Feb 2012
Date of revision:
Handle: RePEc:hhs:gunwpe:0525
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Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden

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