Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 138: The Survival of New Products

Marcus Asplund and Rickard Sandin
Additional contact information
Marcus Asplund: Department of Economics, Postal: Stockholm School of Economics, Box 6501, 113 83 Stockholm, Sweden
Rickard Sandin: Department of Economics, Postal: Stockholm School of Economics, Box 6501, 113 83 Stockholm, Sweden

Abstract: We study the product turnover in an industry and, in particular, the survival of new products. The data set consists of monthly sales of all products sold in the Swedish beer market over the time period of 1989-1995. The death rates of newly introduced products are high - out of 199 products an estimated 25 percent were withdrawn within 18 months and 50 percent within approximately 48 months. We use parametric duration models with time varying covariates to estimate survival functions. Our results show that products with low and decreasing market shares have higher hazard rates. Moreover, the hazard rates are dependent on the characteristics of the producer. Products from firms with a large number of other products, and (to a lesser extent) the largest market shares are more likely to be withdrawn.

Keywords: Product survival; multiproduct firms; duration models; beer market

JEL-codes: C41; L13; L66

26 pages, November 1996

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