Globalization and multiproduct firms

Volker Nocke, Stephen Yeaple

Research output: Contribution to journalArticle

27 Scopus citations

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, whereas others are potentially testable.

Original languageEnglish (US)
Pages (from-to)993-1018
Number of pages26
JournalInternational Economic Review
Volume55
Issue number4
DOIs
StatePublished - Nov 1 2014

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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