Cross-Industry Heterogeneity in Export Participation: The Role of Scale Economies in R&D
AbstractThis paper shows that the R&D intensity of an industry plays an important role in determining international trade patterns via its e¤ect on scale economies. I first develop a model of trade with heterogeneous firms where firms compete with each other by spending on fixed product development costs such as R&D. The model predicts that a larger share of firms are exporters in industries where R&D is a large component of total costs. The model also predicts that R&D-intense industries are less sensitive to trade costs. I find empirical support for these predictions using firm-level data for Swedish manufacturing industries. The results also highlight the importance of controlling for firm size when measuring the firm extensive margin of exports.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 930.
Length: 30 pages
Date of creation: 05 Oct 2012
Date of revision:
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International Trade; Trade Costs; Endogenous Sunk Costs;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-20 (All new papers)
- NEP-CSE-2012-10-20 (Economics of Strategic Management)
- NEP-INO-2012-10-20 (Innovation)
- NEP-INT-2012-10-20 (International Trade)
- NEP-TID-2012-10-20 (Technology & Industrial Dynamics)
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