Firm-level comparative advantage

Matthieu Crozet and Federico Trionfetti

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Abstract: We study the consequences of heterogeneity in factor intensity on firm performance. We present a standard Heckscher–Ohlin model augmented with factor intensity differences across firms within a country–industry pair. We show that for any two firms, each of whose capital intensity is, for instance, one percent above (below) its respective country–industry average, the relative marginal cost of the firm in the capital-intensive industry of the capital-abundant country is lower (higher) than that of the other firm. Our empirical analysis, conducted using data for a large panel of European firms, supports this prediction. These results provide a novel approach to the verification of the Heckscher–Ohlin theory and new evidence on its validity.

Keywords: Factor intensity; Firm heterogeneity; Test of trade theories (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (19)

Published in Journal of International Economics, 2013, 91 (2), pp.321-328. ⟨10.1016/j.jinteco.2013.09.002⟩

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Journal Article: Firm-level comparative advantage (2013)
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Working Paper: Firm-level comparative advantage (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01499627

DOI: 10.1016/j.jinteco.2013.09.002

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