Co-exportation of products by multi-product firms

The attention on multi-product firms has focused primarily on firms’ product scope, i.e., how many products firms sell, rather than on which products they co-produce and sell. We address this by developing a stochastic heterogeneous-firm model that allows for correlations in production efficiencies across products and in consumers’ tastes across products and destinations. Our estimation strategy centers on a novel extension of generalized score matching. We use Chinese export data for the leather sector. The estimates reveal a clustered co-exportation structure consistent with correlated efficiency shocks across products sharing similar production processes.