Products and productivity

Andrew B. Bernard, Stephen J. Redding, Peter K. Schott

Research output: Contribution to journalArticlepeer-review

25 Scopus citations


When firms make decisions about which product to manufacture at a more disaggregated level than observed in the data, measured firm productivity reflects both characteristics of the . firm and attributes of the . products that are non-randomly chosen by the firm. This paper develops a model of industry equilibrium in which firms endogenously sort across products and characterizes the resulting bias in measured firm and aggregate productivity. Calibrating the model's parameters, we show that endogenous product selection can have quantitatively important effects on measured firm and aggregate productivity and their response to changes in parameter values.

Original languageEnglish (US)
Pages (from-to)681-709
Number of pages29
JournalScandinavian Journal of Economics
Issue number4
StatePublished - Dec 2009
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


  • Firm heterogeneity
  • Industry equilibrium
  • Product choice
  • Productivity measurement


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