The superstar and the followers: Intra-firm product complementarity in international trade
Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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The superstar and the followers: Intra-firm product complementarity in international trade. / Arnarson, Björn Thor.
I: Journal of Economic Behavior & Organization, Bind 117, 2020, s. 277-304.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - The superstar and the followers: Intra-firm product complementarity in international trade
AU - Arnarson, Björn Thor
PY - 2020
Y1 - 2020
N2 - Export sales of multi-product firms are known to be skewed towards their best performing core products. Less is known about the large number of products outside the core that still account for a considerable share of the export value. I use high-quality Swedish firm-registry data to investigate if the exports of core and non-core products are systematically interconnected. Using a novel instrumental variable approach, I find evidence that the exports of non-core products respond to trade of the core. Conversely, the same complementarity is not found using non-core products as placebo-cores. Decomposing the response, I find that over a quarter of the effect can be attributed to price changes of non-core products, suggestive of demand-side explanations. The main contribution of this paper is identifying a new, sizeable, and systematic within-firm one-way complementarity between products that can explain non-core product trade flows. Ignoring this pattern of cross-product dependence may lead to an under-emphasis on the core and over-emphasis on individual trade flows as products should not be viewed in isolation, since the ‘superstar’ core has (contemporaneous) followers.
AB - Export sales of multi-product firms are known to be skewed towards their best performing core products. Less is known about the large number of products outside the core that still account for a considerable share of the export value. I use high-quality Swedish firm-registry data to investigate if the exports of core and non-core products are systematically interconnected. Using a novel instrumental variable approach, I find evidence that the exports of non-core products respond to trade of the core. Conversely, the same complementarity is not found using non-core products as placebo-cores. Decomposing the response, I find that over a quarter of the effect can be attributed to price changes of non-core products, suggestive of demand-side explanations. The main contribution of this paper is identifying a new, sizeable, and systematic within-firm one-way complementarity between products that can explain non-core product trade flows. Ignoring this pattern of cross-product dependence may lead to an under-emphasis on the core and over-emphasis on individual trade flows as products should not be viewed in isolation, since the ‘superstar’ core has (contemporaneous) followers.
KW - Faculty of Social Sciences
KW - Multi-product firms
KW - Product complementarity
KW - Intra-firm product dependence
KW - Within-destination export variation
KW - Product demand
KW - Product synergies
U2 - 10.1016/j.jebo.2020.06.013
DO - 10.1016/j.jebo.2020.06.013
M3 - Journal article
VL - 117
SP - 277
EP - 304
JO - Journal of Economic Behavior & Organization
JF - Journal of Economic Behavior & Organization
SN - 0167-2681
ER -
ID: 246671215