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Comparative Advantage and Within-Industry Firms Performance

Matthieu Crozet () and Federico Trionfetti

No 1101, CEPREMAP Working Papers (Docweb) from CEPREMAP

Abstract: Guided by empirical evidence we consider firms heterogeneity in terms of factor intensity. We show that Heckscher-Ohlin comparative advantage and firm-level relative factor-intensity interact to jointly explain the observed differences in relative sales. Firms whose rela- tive factor-intensity matches up with the comparative advantage of the country have lower relative marginal costs and larger relative sales than firms who do not. Our empirical analysis, conducted us- ing data for a large panel of European firms, supports these predic- tions. Our findings also provide an original firm-level verification of the Heckscher-Ohlin model based on the effect of comparative advantage on firms relative sales.

Keywords: Factor intensity; Firms heterogeneity; Test of trade theories. (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2011-01
New Economics Papers: this item is included in nep-bec and nep-int
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Working Paper: Comparative Advantage and Within-Industry Firms Performance (2011) Downloads
Working Paper: Comparative Advantage and Within-Industry Firms Performance (2011) Downloads
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