Comparative advantage and heterogeneous firms

Andrew Bernard, Stephen Redding and Peter Schott

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

Abstract: This paper presents a model of international trade that features heterogeneous firms, relative endowment differences across countries, and consumer taste for variety. The paper demonstrates that firm reactions to trade liberalization generate endogenous Ricardian productivity responses at the industry level that magnify countries’ comparative advantage. Focusing on the wide range of firmlevel reactions to falling trade costs, the model also shows that, as trade costs fall, firms in comparative advantage industries are more likely to export, that relative firm size and the relative number of firms increases more in comparative advantage industries and that job turnover is higher in comparative advantage industries than in comparative disadvantage industries.

Keywords: Heckscher-Ohlin; international trade; inter-industry trade; intra-industry trade; trade costs; entry and exit (search for similar items in EconPapers)
JEL-codes: F11 F12 L11 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2004-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
http://eprints.lse.ac.uk/3700/ Open access version. (application/pdf)

Related works:
Journal Article: Comparative Advantage and Heterogeneous Firms (2007)
Working Paper: Comparative Advantage and Heterogeneous Firms (2004)
Working Paper: Comparative Advantage and Heterogenous Firms (2004)
Working Paper: Comparative advantage and heterogeneous firms (2004)
Working Paper: Comparative Advantage and Heterogeneous Firms (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:3700

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