Working Papers

The Rise of Specialized Financial Products (with Ana Babus and Matias Marzani) [Paper] December 2025 

The variety of financial products available for firms to raise funds has expanded rapidly in recent decades. This paper studies the role of innovations that introduce specialized financial products using a combination of granular data and a parsimonious model of security issuance. We present three key findings. First, differential product adoption across firms explains most of the observed variation in the amounts of funds raised. Second, firms that adopt new products are more successful in raising funds. Third, the funds raised from new financial products are often sourced from numerous highly specialized products, each used by only a few firms.

Patents to Products: Product Innovation and Firm Dynamics (with David Argente, Salomé Baslandze, and Douglas Hanley)  [Paper] November 2025

We use natural language methods to match patents to products in the consumer goods sector. While more than half of product innovations originate from non-patenting firms, patent filings are on average followed by subsequent product introductions, though this relationship weakens with firm size. Patents held by market leaders also generate revenue premiums beyond what their own product introductions explain and are linked to stronger deterrence of competitors' innovations. We develop a simple growth model in which larger firms have stronger incentives to engage in strategic patenting, filing for protection rather than market innovation, which dampens innovation and slows creative destruction.

Innovation and Pricing Frictions (with Xiaojie Liu) [Paper] November 2025 

We show that pricing frictions operate over much longer horizons than standard macroeconomic models assume, with important consequences for innovation and growth. Using product–firm longitudinal data, we document that incumbent nominal prices remain nearly flat over the life cycle, while new products enter at sizable premia, a patterns we refer to as “price overshooting'“, and overshooting scales with sectoral stickiness and cost shocks. Motivated by these facts, we develop an endogenous growth model with long-run pricing frictions that rationalizes these patterns. Pricing frictions weaken innovation incentives, while price overshooting partially mitigates these losses and informs optimal R&D policy.

Scalable Expertise: How Standardization Drives Scale and Scope (with David Argente, Ezra Oberfield, and Venky Venkateswaran) [Paper] August 2025, Journal of Political Economy, revise and resubmit​

We present a theory of firm size, where both scope and expertise are chosen endogenously. The extent to which expertise is scalable (applicable to multiple products), as opposed to local (specific to a particular product), is also chosen by the firm.  We use data on multi-product and multi-establishment firms, and provide empirical evidence in support of the model’s predictions.

Firm Dynamics, Persistent Effects of Entry Conditions, and Business Cycles [Paper] April 2018

I provide new evidence that businesses born in downturns start on a smaller scale and remain smaller over their entire lifecycle, and no evidence that these differences attenuate even long after entry. Using data on the productivity and composition of startup businesses, I show that this persistence is related to selection at entry and demand-side channels. I build a model of firm dynamics that shows that when I mute the effects of selection mechanisms, the average initial size differences are more procyclical, but they are less persistent over time. 

Publications 

How do Entrant Build Market Share? The Role of Demand Frictions (with David Argente, Doireann Fitzgerald, and Anthony Priolo) [Paper] 
American Economic Review: Insights, June 2024

We construct a new data set to show that successful entrants in the consumer food sector build market share by adding new customers. Entrants reach new customers by entering more geographical markets, placing their product in more stores in these markets, and for a positively selected subset of firms, by advertising direct to customers. These activities are costly and are associated with persistent increases in quantities, but there are no differences in markups between new and mature markets. This confirms a central role for marketing and advertising in overcoming demand-side frictions that slow firm growth.

The Life Cycle of Products: Evidence and Implications (with David Argente and Munseob Lee) [Paper] [Appendix] [Bib] [Slides] 
Journal of Political Economy,  February 2024 (lead article).

We document that the sales of individual products decline at a steady pace throughout most of their life cycles, mostly because the appeal of products declines with age. Our empirical and model-based results are consistent with products quickly becoming obsolete as they face competition from newer products of competing firms (business stealing) and from newer products of the same firm (cannibalization). [This paper was previously circulated as ''How do firms grow? The life cycle of products matters''.]

The Expansion of Product Varieties in the New Age of Advertising (with Salomé Baslandze, Jeremy Greenwood, and Ricardo Prato) [Paper] [Bib] [Slides] 
Review of Economic Dynamics, October 2023

The last decades have seen large improvements in advertising technology that allowed firms to target better specific consumers’s tastes. This paper studies the relationship between digital advertising and the rise of product varieties using empirical evidence and a model. The model shows that improvements in digital advertising can drive the rise in product varieties over time. Causal empirical evidence, using detailed micro data on firms’ products and exogenous variation in consumers’ differential access to the internet, supports the suggested mechanism.

Product Innovation and Credit Market Disruptions (with João Granja) [Paper] 
Review of Financial Studies, September  2022 

We provide new evidence that disruptions in firms’ access to credit during the Global Financial Crisis had significant effects on product innovation in the consumer-goods sector. We combine highly-granular retail-scan data with lending data and we find that credit-constrained firms introduced fewer new products, those products were less novel, and the new products sold less well. Overall, these findings suggest that disruptions to credit markets impair firms’ ability to compete for profits through new-product offerings..

Innovation and Product Reallocation in the Great Recession (with David Argente and Munseob Lee) [Paper] 
Journal of Monetary Economics, January 2018 

We use detailed product- and firm-level data to study the sources of innovation over the period from 2007 to 2013. We document that: (i) entry and exit of products is prevalent among different types of firms; (ii) most reallocation of products occurs within the boundaries of the firm; (iii) product reallocation is strongly pro-cyclical and declined by more than 25 percent during the Great Recession.  

Non-refereed Publications 

The Life Cycle of Businesses and Their Internal Organization (with Elizabeth Weber Handwerker and David Piccone)  [Paper] 
AEA Papers and Proceedings, May 2021 

We document new stylized facts on the occupational mix of businesses in the U.S. and on how their internal organization evolves over their life cycles. Our main empirical finding is that younger businesses have fewer hierarchical layers and span of control than comparable older businesses. Our results suggest that businesses become more hierarchical and increase their managerial span of control over their life cycles. We show that this pattern is not entirely driven by selection or differences in size and is pervasive across cohorts and sectors.

Innovation for Innovators: The Financing of Intangibles  (with Ana Babus and Matias Marzani),  [Paper] 
AEA Papers and Proceedings,  May 2023 

This paper examines the characteristics of firms that adopt new financial products and its association with measures of performance. We build a novel firm-level panel dataset and document a positive association between intangible capital and the adoption of new products. We also find that access to external financing through new types of securities is associated with size growth and further investments into intangibles. These findings have important implications for understanding the role that financial innovation can play in meeting the financing needs of firms that rely heavily on intangible capital.

Work in Progress 

Firm Dynamics and Internal Organization (with Joana Silva and Martim Leitão)

Politically Polarized Consumption (with Quoc-Anh Do, Joao Granja, and Kieu-Trang Nguyen)

Firms’ AI Skills and the Direction of Product Innovation (with David Argente and Eugenia Menaguale)