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Comparative Advantage and Within-Industry Firms Performance

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  • Crozet, Matthieu
  • Trionfetti, Federico

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.

Suggested Citation

  • Crozet, Matthieu & Trionfetti, Federico, 2011. "Comparative Advantage and Within-Industry Firms Performance," CEPREMAP Working Papers (Docweb) 1101, CEPREMAP.
  • Handle: RePEc:cpm:docweb:1101
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    Cited by:

    1. Unjung Whang, 2016. "Skilled-Labor Intensity Differences Across Firms, Endogenous Product Quality, and Wage Inequality," Open Economies Review, Springer, vol. 27(2), pages 251-292, April.

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    More about this item

    Keywords

    Factor intensity; Firms heterogeneity; Test of trade theories.;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade

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