Cross-Industry Heterogeneity in Export Participation: The Role of Scale Economies in R&D

Shon Ferguson

No 930, Working Paper Series from Research Institute of Industrial Economics

Abstract: This paper shows that the R&D intensity of an industry plays an important role in determining international trade patterns via its e¤ect on scale economies. I first develop a model of trade with heterogeneous firms where firms compete with each other by spending on fixed product development costs such as R&D. The model predicts that a larger share of firms are exporters in industries where R&D is a large component of total costs. The model also predicts that R&D-intense industries are less sensitive to trade costs. I find empirical support for these predictions using firm-level data for Swedish manufacturing industries. The results also highlight the importance of controlling for firm size when measuring the firm extensive margin of exports.

Keywords: International Trade; Trade Costs; Endogenous Sunk Costs (search for similar items in EconPapers)
JEL-codes: F12 L11 O30 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2012-10-05
New Economics Papers: this item is included in nep-cse, nep-ino, nep-int and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0930

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