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Firm-level comparative advantage

Author

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  • Matthieu Crozet

    (IUF - Institut universitaire de France - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales)

  • Federico Trionfetti

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

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.

Suggested Citation

  • Matthieu Crozet & Federico Trionfetti, 2013. "Firm-level comparative advantage," PSE-Ecole d'économie de Paris (Postprint) hal-01499627, HAL.
    • Handle: RePEc:hal:pseptp:hal-01499627
    DOI: 10.1016/j.jinteco.2013.09.002
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    Cited by:

    1. Juan Carluccio & Alejandro Cuñat & Harald Fadinger & Christian Fons-Rosen, 2015. "Offshoring and Skill-upgrading in French Manufacturing: A Heckscher-Ohlin-Melitz View," CeFiG Working Papers 22, Center for Firms in the Global Economy, revised 29 Sep 2015.
    2. Dewitte, Ruben & Dumont, Michel & Merlevede, Bruno & Rayp, Glenn & Verschelde, Marijn, 2020. "Firm-Heterogeneous Biased Technological Change: A nonparametric approach under endogeneity," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1172-1182.
    3. Chen, Zhao & Poncet, Sandra & Xiong, Ruixiang, 2017. "Inter-industry relatedness and industrial-policy efficiency: Evidence from China’s export processing zones," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 809-826.
    4. Sun, Chang, 2020. "Multinational production with non-neutral technologies," Journal of International Economics, Elsevier, vol. 123(C).
    5. Kukharskyy, Bohdan, 2020. "A tale of two property rights: Knowledge, physical assets, and multinational firm boundaries," Journal of International Economics, Elsevier, vol. 122(C).
    6. Julien Gourdon & Laura Hering & Stéphanie Monjon & Sandra Poncet, 2019. "Trade policy repercussions: the role of local product space -Evidence from China," Working Papers hal-02065779, HAL.
    7. Trionfetti, Federico, 2018. "Firm heterogeneity, comparative advantage and the transfer problem," European Economic Review, Elsevier, vol. 108(C), pages 246-258.
    8. Julien Gourdon & Laura Hering & Stéphanie Monjon & Sandra Poncet, 2022. "Estimating the Repercussions from China’s Export VAT Rebate Policy," PSE-Ecole d'économie de Paris (Postprint) hal-03274542, HAL.
    9. Carluccio, Juan & Cuñat, Alejandro & Fadinger, Harald & Fons-Rosen, Christian, 2019. "Offshoring and skill-upgrading in French manufacturing," Journal of International Economics, Elsevier, vol. 118(C), pages 138-159.
    10. GORYUNOV, Maxim, 2017. "Sorting when firms have size," Economics Working Papers MWP 2017/09, European University Institute.

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    More about this item

    Keywords

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

    JEL classification:

    • F1 - International Economics - - Trade

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