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Firm-level comparative advantage

Author

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  • Crozet, Matthieu
  • Trionfetti, Federico
Abstract
We study the consequences of heterogeneity in factor intensity on firm performance. We present a standard Heckscher–Ohlin model augmented with factor intensity differences across firms within a country–industry pair. We show that for any two firms, each of whose capital intensity is, for instance, one percent above (below) its respective country–industry average, the relative marginal cost of the firm in the capital-intensive industry of the capital-abundant country is lower (higher) than that of the other firm. Our empirical analysis, conducted using data for a large panel of European firms, supports this prediction. These results provide a novel approach to the verification of the Heckscher–Ohlin theory and new evidence on its validity.

Suggested Citation

  • Crozet, Matthieu & Trionfetti, Federico, 2013. "Firm-level comparative advantage," Journal of International Economics, Elsevier, vol. 91(2), pages 321-328.
    • Handle: RePEc:eee:inecon:v:91:y:2013:i:2:p:321-328
    DOI: 10.1016/j.jinteco.2013.09.002
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    Cited by:

    1. Juan Carluccio & Alejandro Cuñat & Harald Fadinger & Christian Fons-Rosen, 2015. "Offshoring and Skill-upgrading in French Manufacturing: A Heckscher-Ohlin-Melitz View," CeFiG Working Papers 22, Center for Firms in the Global Economy, revised 29 Sep 2015.
    2. Chen, Zhao & Poncet, Sandra & Xiong, Ruixiang, 2017. "Inter-industry relatedness and industrial-policy efficiency: Evidence from China’s export processing zones," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 809-826.
    3. Dewitte, Ruben & Dumont, Michel & Merlevede, Bruno & Rayp, Glenn & Verschelde, Marijn, 2020. "Firm-Heterogeneous Biased Technological Change: A nonparametric approach under endogeneity," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1172-1182.
    4. Julien Gourdon & Laura Hering & Stéphanie Monjon & Sandra Poncet, 2022. "Estimating the Repercussions from China’s Export VAT Rebate Policy," PSE-Ecole d'économie de Paris (Postprint) hal-03274542, HAL.
    5. Trionfetti, Federico, 2018. "Firm heterogeneity, comparative advantage and the transfer problem," European Economic Review, Elsevier, vol. 108(C), pages 246-258.
    6. Carluccio, Juan & Cuñat, Alejandro & Fadinger, Harald & Fons-Rosen, Christian, 2019. "Offshoring and skill-upgrading in French manufacturing," Journal of International Economics, Elsevier, vol. 118(C), pages 138-159.
    7. Sun, Chang, 2020. "Multinational production with non-neutral technologies," Journal of International Economics, Elsevier, vol. 123(C).
    8. Kukharskyy, Bohdan, 2020. "A tale of two property rights: Knowledge, physical assets, and multinational firm boundaries," Journal of International Economics, Elsevier, vol. 122(C).
    9. Julien Gourdon & Laura Hering & Stéphanie Monjon & Sandra Poncet, 2019. "Trade policy repercussions: the role of local product space -Evidence from China," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-02065779, HAL.
    10. GORYUNOV, Maxim, 2017. "Sorting when firms have size," Economics Working Papers MWP 2017/09, European University Institute.

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    More about this item

    Keywords

    Factor intensity; Firm heterogeneity; Test of trade theories;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade

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