Working Paper: NBER ID: w25183
Authors: Matthew Grennan; Charu Gupta; Mara Lederman
Abstract: When firms span related product categories, spillovers across categories become central to firm strategy and industrial policy, due to their potential to foreclose competition and affect innovation incentives. We exploit major new product innovations in one medical device category, and detailed sales data across related categories, to develop a causal research design for spillovers at the customer level. We find evidence of spillovers, primarily associated with complementarities in usage. These spillovers imply large benefits to multi- vs. single-category firms, accounting for nearly one quarter of sales in the complimentary category (equivalent to four percent of revenue in the focal category).
Keywords: spillovers; product innovation; medical devices; firm scope; interventional cardiology
JEL Codes: D22; D43; I11; K21; L1; L13; L25; L38; L4; L5; M2; M21; O25; O31; O32; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| manufacturer's stent share (L60) | balloon share (Y60) |
| manufacturer's stent share (L60) | guidewire share (G22) |
| spillovers from stents to balloons (F65) | revenue boost (H27) |