Comparative Advantage and Heterogeneous Firms

Andrew Bernard, Stephen Redding and Peter Schott

No 10668, NBER Working Papers from National Bureau of Economic Research, Inc

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 firm-level 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.

JEL-codes: F11 F12 (search for similar items in EconPapers)
Date: 2004-08
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

Published as Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2007. "Comparative Advantage and Heterogeneous Firms," Review of Economic Studies, Blackwell Publishing, vol. 74(1), pages 31-66, 01.

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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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