The comparative advantage of firms

Johannes Boehm, Swati Dhingra and John Morrow

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Resource based theories propose that firms grow by diversifying into products which use common capabilities. We provide evidence for common input capabilities using a policy that removed entry barriers in input markets to show that the similarity of a firm’s and industry’s input mix determine firm production choices. We model industry choice and economies of scope from input capabilities. Estimating the model for Indian manufacturing, input complementarities make firms 5% more likely to produce in an industry and are quantitatively as important as time-invariant drivers of co-production rates. Upstream entry barriers were equivalent to a 9.5% tariff on inputs.

Keywords: multiproduct firms; firm capabilities; vertical input linkages; comparative advantages; economies of scope; size-based policies; LSE - TISS - TATA Grant; Starting Grant 760037 (search for similar items in EconPapers)
JEL-codes: J01 L81 R14 (search for similar items in EconPapers)
Pages: 76 pages
Date: 2022-12-01
New Economics Papers: this item is included in nep-bec and nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published in Journal of Political Economy, 1, December, 2022, 130(12), pp. 3025 - 3100. ISSN: 0022-3808

Downloads: (external link)
http://eprints.lse.ac.uk/115137/ Open access version. (application/pdf)

Related works:
Journal Article: The Comparative Advantage of Firms (2022)
Working Paper: The Comparative Advantage of Firms (2021)
Working Paper: The Comparative Advantage of Firms (2021)
Working Paper: The comparative advantage of firms (2019)
Working Paper: The Comparative Advantage of Firms (2019)
Working Paper: The comparative advantage of firms (2019)
Working Paper: The Comparative Advantage of Firms (2019)
Working Paper: The Comparative Advantage of Firms (2019)
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