In this paper, we reconcile two different strands of the literature: the literature on how new goods impact prices and the literature on productivity growth and firm turnover. The decomposition we propose generalises the framework currently used in the literature. Moreover, we extend the estimator for the demand elasticity, proposed by Feenstra (1994) and supplemented by Soderbery (2015). To illustrate the decomposition and estimator, we analyse the case of firm turnover in Norway. Our results indicate that net creation of new varieties from firm turnover contributes by about one half percentage point to annual aggregate productivity growth.
