Multi-product firms and business cycle dynamics
Recent empirical evidence provided by Bernard et al. (2010) and Broda and Weinstein (2010) shows that a significant share of product creation and destruction in U.S. industries occurs within existing firms and accounts for a relevant share of aggregate output. In the present paper, and consistently with this evidence, we relax the standard assumption of mono-product firms that is typically made in dynamic general equilibrium models. Building on the work of Jaimovich and Floetotto (2008), we develop an RBC model with multi-product firms and endogenous markups to assess the implications of the intra-firm extensive margin on business cycle fluctuations. In this environment, the procyclicality of product creation emerges as a consequence of strategic interactions among firms. Because of the proliferation effect induced by changes in product scope, our model embodies a quantitatively important magnification mechanism of technology shocks.
|Date of creation:||Sep 2011|
|Date of revision:|
|Publication status:||Published by Ivie|
|Contact details of provider:|| Postal: |
Phone: +34 96 319 00 50
Fax: +34 96 319 00 55
Web page: http://www.ivie.es/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jaimovich, Nir & Floetotto, Max, 2008.
"Firm dynamics, markup variations, and the business cycle,"
Journal of Monetary Economics,
Elsevier, vol. 55(7), pages 1238-1252, October.
- Nir Jaimovich, 2004. "Firm Dynamics, Markup Variations, and the Business Cycle," Discussion Papers 07-013, Stanford Institute for Economic Policy Research, revised Mar 2007.
- Devereux, Michael B. & Head, Allen C. & Lapham, Beverly J., 1996. "Aggregate fluctuations with increasing returns to specialization and scale," Journal of Economic Dynamics and Control, Elsevier, vol. 20(4), pages 627-656, April.
- Volker Nocke & Stephen Yeaple, 2006.
"Globalization and Endogenous Firm Scope,"
PIER Working Paper Archive
06-015, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Morten Ravn & Stephanie Schmitt-Grohe & Martin Uribe, 2004.
NBER Working Papers
10261, National Bureau of Economic Research, Inc.
- Satyajit Chatterjee & Russell W. Cooper, 1993.
"Entry and exit, product variety and the business cycle,"
93-30, Federal Reserve Bank of Philadelphia.
- Satyajit Chatterjee & Russell Cooper, 2014. "Entry And Exit, Product Variety, And The Business Cycle," Economic Inquiry, Western Economic Association International, vol. 52(4), pages 1466-1484, October.
- Satyajit Chatterjee & Russell Cooper, 1993. "Entry and Exit, Product Variety and the Business Cycle," NBER Working Papers 4562, National Bureau of Economic Research, Inc.
- Florin O. Bilbiie & Fabio Ghironi & Marc J. Melitz, 2012.
"Endogenous Entry, Product Variety, and Business Cycles,"
Journal of Political Economy,
University of Chicago Press, vol. 120(2), pages 304 - 345.
- Florin Bilbiie & Fabio Ghironi & Marc J. Melitz, 2007. "Endogenous Entry, Product Variety, and Business Cycles," NBER Working Papers 13646, National Bureau of Economic Research, Inc.
- Bilbiie, Florin O. & Ghironi, Fabio & Melitz, Marc J., 2012. "Endogenous Entry, Product Variety, and Business Cycles," Scholarly Articles 10914281, Harvard University Department of Economics.
- Bilbiie, Florin Ovidiu & Ghironi, Fabio & Melitz, Marc J, 2011. "Endogenous Entry, Product Variety, and Business Cycles," CEPR Discussion Papers 8564, C.E.P.R. Discussion Papers.
- Paul Allanson & Catia Montagna, 1999.
"Multiproduct Firms and Market Structure: An Explorative Application to the Product Life Cycle,"
Dundee Discussion Papers in Economics
101, Economic Studies, University of Dundee.
- Allanson, Paul & Montagna, Catia, 2005. "Multiproduct firms and market structure: An explorative application to the product life cycle," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 587-597, September.
- Eckel, Carsten & Neary, J Peter, 2006.
"Multi-Product Firms and Flexible Manufacturing in the Global Economy,"
CEPR Discussion Papers
5941, C.E.P.R. Discussion Papers.
- Carsten Eckel & J. Peter Neary, 2010. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," Review of Economic Studies, Oxford University Press, vol. 77(1), pages 188-217.
- Peter Neary & Carsten Eckel, 2006. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," Economics Series Working Papers 292, University of Oxford, Department of Economics.
- Carsten Eckel & J Peter Neary, 2006. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," Working Papers 200608, School Of Economics, University College Dublin.
- Eckel, Carsten & Neary, J. P., 2010. "Multi-product firms and flexible manufacturing in the global economy," Munich Reprints in Economics 20525, University of Munich, Department of Economics.
- repec:bla:restud:v:77:y:2010:i:1:p:188-217 is not listed on IDEAS
- Simon P. Anderston & Andre de Palma, 1991.
"Multiproduct Firms: A Nested Logit Approach,"
973, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Cogley, Timothy & Nason, James M, 1995.
"Output Dynamics in Real-Business-Cycle Models,"
American Economic Review,
American Economic Association, vol. 85(3), pages 492-511, June.
When requesting a correction, please mention this item's handle: RePEc:ivi:wpasad:2011-20. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Departamento de Edición)
If references are entirely missing, you can add them using this form.