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The Superstar and the Followers : Intra-Firm Product Complementarity in International Trade

Arnarson, Björn Thor LU (2016) In Working Papers, Department of Economics 2016(25).
Abstract (Swedish)
This paper investigates whether the exports of different products by the same firm are systematically interconnected. Using 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 complement the exports of a single superstar product to each destination. Extending the ‘superstar’ concept to a ‘superstar core’ of products strengthens this result (this includes the top decile of products in terms of export value). The... (More)
This paper investigates whether the exports of different products by the same firm are systematically interconnected. Using 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 complement the exports of a single superstar product to each destination. Extending the ‘superstar’ concept to a ‘superstar core’ of products strengthens this result (this includes the top decile of products in terms of export value). The results show that a 1% increase in the exports of the superstar product and the superstar core increases the exports of non-star products by 0.13% and 0.376%. Hence, I find that the exports of non-star products complements the superstar while conversely, the same complementarity is not found using low-ranked products as placebo-superstars. The main contribution of this paper is identifying a new, sizeable and systematic intra-firm-destination one-way complementarity between products that is missing in the current models of multi-product exporters. (Less)
Abstract
This paper investigates whether the exports of different products by the same firm are systematically interconnected. Using 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 complement the exports of a single superstar product to each destination. Extending the ‘superstar’ concept to a ‘superstar core’ of products strengthens this result (this includes the top decile of products in terms of export value). The... (More)
This paper investigates whether the exports of different products by the same firm are systematically interconnected. Using 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 complement the exports of a single superstar product to each destination. Extending the ‘superstar’ concept to a ‘superstar core’ of products strengthens this result (this includes the top decile of products in terms of export value). The results show that a 1% increase in the exports of the superstar product and the superstar core increases the exports of non-star products by 0.13% and 0.376%. Hence, I find that the exports of non-star products complements the superstar while conversely, the same complementarity is not found using low-ranked products as placebo-superstars. The main contribution of this paper is identifying a new, sizeable and systematic intra-firm-destination one-way complementarity between products that is missing in the current models of multi-product exporters. (Less)
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author
organization
publishing date
type
Working Paper
publication status
published
subject
keywords
Multi-product firms, product complementarity, spillovers, intra-firm spillover, international trade, inter-product spillover, multi-product firms, product complementarity, spillovers, intra-firm spillover, international trade, inter-product spillover
in
Working Papers, Department of Economics
volume
2016
issue
25
pages
39 pages
publisher
Department of Economics, Lund University
language
English
LU publication?
yes
id
73a1a981-ac77-422f-a0a3-441a7e332d5e
alternative location
http://swopec.hhs.se/lunewp/abs/lunewp2016_025.htm
date added to LUP
2016-11-16 10:16:44
date last changed
2016-12-27 13:41:39
@misc{73a1a981-ac77-422f-a0a3-441a7e332d5e,
  abstract     = {This paper investigates whether the exports of different products by the same firm are systematically interconnected. Using 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 complement the exports of a single superstar product to each destination. Extending the ‘superstar’ concept to a ‘superstar core’ of products strengthens this result (this includes the top decile of products in terms of export value). The results show that a 1% increase in the exports of the superstar product and the superstar core increases the exports of non-star products by 0.13% and 0.376%. Hence, I find that the exports of non-star products complements the superstar while conversely, the same complementarity is not found using low-ranked products as placebo-superstars. The main contribution of this paper is identifying a new, sizeable and systematic intra-firm-destination one-way complementarity between products that is missing in the current models of multi-product exporters.},
  author       = {Arnarson, Björn Thor},
  keyword      = { Multi-product firms,product complementarity,spillovers, intra-firm spillover,international trade,inter-product spillover,multi-product firms,product complementarity,spillovers,intra-firm spillover,international trade,inter-product spillover},
  language     = {eng},
  month        = {10},
  note         = {Working Paper},
  number       = {25},
  pages        = {39},
  publisher    = {Department of Economics, Lund University },
  series       = {Working Papers, Department of Economics},
  title        = {The Superstar and the Followers : Intra-Firm Product Complementarity in International Trade},
  volume       = {2016},
  year         = {2016},
}