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讲座简介：
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Multiproduct firms account for a large fraction of economic activity and actively engage in changing their product offerings. This paper investigates changes in product scope, the number of products that a firm has, over the business cycle. I use the product-level Nielsen Retail Scanner data of U.S. consumer goods purchases for 2007-2014. Product scope is shown to be an important margin of adjustment: in the recession, firms offer fewer products and the declines in product scope vary across firms of different sizes. Such product scope changes affect aggregate consumption and output by changing the total number of products available in the market and by affecting firms' markups. This decomposition is shown in a model featuring heterogeneous multiproduct firms, oligopolistic competition and free firm entry. In a recession, lower average product scope implies lower number of product varieties, which disincentivizes consumption. Additionally, the largest firms cut fewer products and acquire more market shares, so they charge higher markups as oligopolistic competitors. The average markup goes up and further decreases consumption. |
