The Comparative Advantage of Firms

Johannes Boehm, Swati Dhingra and John Morrow

Journal of Political Economy, 2022, vol. 130, issue 12, 3025 - 3100

Abstract: Resource-based theories propose that firms grow by diversifying into products that 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 an industry’s input mix determines firm production choices. We model industry choice and economies of scope from input capabilities. When the model is estimated 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 coproduction rates. Upstream entry barriers were equivalent to a 9.5% tariff on inputs.

Date: 2022
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Related works:
Working Paper: 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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