We thank Mark J. Roberts as well as two anonymous referees for very helpful comments.
Product Choice and Market Competition: The Case of Multiproduct Electronic Plants in Taiwan*
Article first published online: 9 DEC 2009
© The editors of the Scandinavian Journal of Economics 2009
The Scandinavian Journal of Economics
Volume 111, Issue 4, pages 711–740, December 2009
How to Cite
Aw, B. Y. and Lee, Y. (2009), Product Choice and Market Competition: The Case of Multiproduct Electronic Plants in Taiwan. The Scandinavian Journal of Economics, 111: 711–740. doi: 10.1111/j.1467-9442.2009.01590.x
- Issue published online: 9 DEC 2009
- Article first published online: 9 DEC 2009
- Multiproduct plants;
- product strategy;
- supply complementarities
We examine the strategies of multiproduct plants in the Taiwanese electronics sector by introducing two new measures of product dissimilarity to capture the technological gaps of product pairs within the plant. The plant-level index is used to analyze product mix decisions of plants. We find that plants whose products have large technological gaps are more likely to give up product lines. The product-level index is used to show that, with increased competition, multiproduct plants exit markets where production technologies are farthest away from their core products and they also perform better than plants that continue to produce a wider range of products.