Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 525: Multi-product firms, product mix changes and upgrading: Evidence from China's state-owned forest areas
Måns Söderbom () and Qian Weng ()
Additional contact information
Måns Söderbom: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O Box 640, SE 40530 GÖTEBORG, Sweden
Qian Weng: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 GÖTEBORG, Sweden
Abstract: Product selection matters for a firm’s productivity and long-run growth. Recent theoretical and empirical studies indicate that an important margin of adjustment to policy reforms is the reallocation of output within firms through changes in product mix decisions. This paper examines the frequency, pervasiveness and determinants of product switching and upgrading activities in firms located in China’s state-owned forest areas during a period of gradual institutional and managerial reforms (2004-2008). We find that changes to the product mix are pervasive and characterized by adding or churning products rather than only shedding products. Moreover, changes in firms’ product mix have made a significant contribution to the aggregate output growth during our sample period. We also find that firms with different characteristics, human capital and market conditions differ in their propensity to diversify and upgrade product mix.
Keywords: multi-product firms; product mix changes; product upgrading; firm characteristics; China's state-owned forest areas
46 pages, February 9, 2012
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