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Product Choice and Market Competition: The Case of Multiproduct Electronic Plants in Taiwan *
Author(s) -
Aw Bee Yan,
Lee Yi
Publication year - 2009
Publication title -
the scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2009.01590.x
Subject(s) - competition (biology) , product (mathematics) , index (typography) , industrial organization , production (economics) , economics , core (optical fiber) , product market , range (aeronautics) , business , microeconomics , computer science , mathematics , engineering , telecommunications , ecology , geometry , incentive , world wide web , biology , aerospace engineering
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.