Abstract
Measuring the welfare impact of new product introductions is a long-standing challenge for economists. In this study, we make progress on this problem by leveraging the informational efficiency of equity markets and a scalable consumer demand model. We construct a novel database of new product announcements covering 20 years ( 2002 - 2021 ) and use stock market reactions to estimate the profits that these new products generate for the inventor firms. We then use the network oligopoly model of Pellegrino (2025) to measure the change in competitors’ profits and consumer surplus induced by the new products, thus obtaining the dollar welfare generated. We find that: 1) new products introduced by U.S. publicly-traded firms generate substantial welfare gains, between 0.9 % and 2.2 % of US GDP per year; 2) a minority of the announcements account for most of the gains; 3) producer surplus accounts for roughly 39 % of these gains. This latter figure is significantly higher than for existing products: we show that this is due to the fact that new product creation is concentrated among firms that have a high degree of market power.