Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/260197 
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 2016:25
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
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.
Subjects: 
Multi-product firms
product complementarity
intra-firm product dependence
within-destination export variation
Product Demand
JEL: 
F10
F13
F14
L10
L20
Document Type: 
Working Paper

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