Department of Economics and Business Economics

Endogenous product scope: Market interlacing and aggregate business cycle dynamics

Research output: Contribution to journal/Conference contribution in journal/Contribution to newspaperJournal articleResearchpeer-review

  • Oscar Pavlov, University of Tasmania, Australian National University
  • ,
  • Mark Weder

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.

Original languageEnglish
Article number104243
JournalEuropean Economic Review
Number of pages11
Publication statusPublished - Sep 2022

Bibliographical note

Publisher Copyright:
© 2022 The Author(s)

    Research areas

  • Business cycles, Multi-product firms

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