Firm-level comparative advantage
Journal of International Economics
Factor intensity, Firm heterogeneity, Test of trade theories
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.
Financial support from CEPREMAP and GREQAM and PSE.
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This article previously published as Crozet, M., & Trionfetti, F. (2011). Comparative advantage and within-industry firms performance. CEPII Working Paper, (2011-01). France: CEPII. Retrieved from http://www.cepii.fr/PDF_PUB/wp/2011/wp2011-01.pdf
Crozet, M., & Trionfetti, F. (2013). Firm-level comparative advantage. Journal of International Economics, 91(2), 321-328. doi: 10.1016/j.jinteco.2013.09.002