Globalization and multiproduct firms

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URL:	https://madoc.bib.uni-mannheim.de/33985
URN:	urn:nbn:de:bsz:180-madoc-339850
Document Type:	Working paper
Year of publication:	2013
The title of a journal, publication series:	Working Paper Series
Volume:	13-10
Place of publication:	Mannheim
Publication language:	English
Institution:	School of Law and Economics > VWL, Mikroökonomik (Nocke 2009-)
MADOC publication series:	Department of Economics > Working Paper Series
Subject:	330 Economics
Classification:	JEL: F12 , F15,
Keywords (English):	multiproduct firms , trade liberalization , diversification discount , firm heterogeneity , productivity
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.