Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2016:25: The Superstar and the Followers: Intra-Firm Product Complementarity in International Trade

Björn Thor Arnarson ()
Additional contact information
Björn Thor Arnarson: Department of Economics, University of Copenhagen

Abstract: This paper investigates whether firms’ exports of different products within a market are systematically interconnected. Using high-quality Swedish firm-registry data from 1997-2011, I first document that the distribution of firm export sales is skewed towards their best performing products (‘superstars’). I then use a novel instrumental variable approach to identify if the ‘superstar’ products induce more trade of non-superstar products. I find evidence that the exports of low-ranked (non-star) products of a firm are contingent on the exports of a single superstar product to each destination. Extending the ‘superstar’ concept to a ‘superstar core’ of products strengthens this result. Hence, I find that the exports of non-star products complements the superstar(s) while conversely, the same complementarity is not found using low-ranked products as placebo-superstars. The main contributions of this paper is identifying a new, sizeable and systematic intra-firm-destination one-way demand driven complementarity between products that can explain export sales variation within a market. Ignoring this pattern of between product dependency may lead to an over-emphasis on product scope as products should not be viewed in isolation.

Keywords: Multi-product firms; product complementarity; intra-firm product dependence; within-destination export variation; Product Demand

JEL-codes: F10; F13; F14; L10; L20

40 pages, First version: October 11, 2016. Revised: September 22, 2017.

Full text files

wp16_25.pdf PDF-file 

Download statistics

Questions (including download problems) about the papers in this series should be directed to Prakriti Thami ()
Report other problems with accessing this service to Sune Karlsson ().

This page generated on 2024-03-09 16:03:10.