TY - JOUR
T1 - Endogenous product scope: Market interlacing and aggregate business cycle dynamics
AU - Pavlov, Oscar
AU - Weder, Mark
PY - 2022
Y1 - 2022
N2 - This paper examines a market interlacing industry configuration in general equilibrium with multi-product firms. In contrast to previous studies which utilize market segmentation, firms produce multiple products even in the complete absence of the love of variety. Product scopes are procyclical and entry and exit of firms generates an endogenous amplification mechanism. When simulated by shocks derived from the efficiency and labor wedges, the model replicates the changes in dynamics between the pre- and post 1983 periods, and explains the hours-productivity puzzle.
AB - This paper examines a market interlacing industry configuration in general equilibrium with multi-product firms. In contrast to previous studies which utilize market segmentation, firms produce multiple products even in the complete absence of the love of variety. Product scopes are procyclical and entry and exit of firms generates an endogenous amplification mechanism. When simulated by shocks derived from the efficiency and labor wedges, the model replicates the changes in dynamics between the pre- and post 1983 periods, and explains the hours-productivity puzzle.
U2 - 10.1016/j.euroecorev.2022.104243
DO - 10.1016/j.euroecorev.2022.104243
M3 - Article
SN - 0014-2921
VL - 148
SP - 11
JO - European Economic Review
JF - European Economic Review
ER -