Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
962509 | Journal of International Economics | 2013 | 8 Pages |
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
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Matthieu Crozet, Federico Trionfetti,