The Comparative Advantage of Firms
Bibliographic Data
| ID | 10175752 |
|---|---|
| Authors | Johannes Boehm (0000-0002-6896-5314, Economic Research Centre), Swati Dhingra (0000-0001-5468-3415, Economic Research Centre), John Morrow (0000-0002-9995-823X, King's College London) |
| Year | 2022 |
| Volume | 130 |
| Issue | 12 |
| Pages | 3025-3100 |
| Publication date | 2022-04-28 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/720630 |
| OpenAlex | W2937638237 |
| Language | EN |
| Citations received | 1 |
| References cited | 61 |
Multiproduct firms dominate production, and their product turnover contributes substantially to aggregate growth. Theories propose that multiproduct firms grow by diversifying into products which need the same know-how or capabilities, but are less clear on what these capabilities are. Input-output tables show firms co-produce in industries that share intermediate inputs, suggesting input capabilities drive multiproduct production patterns. We provide evidence for this in Indian manufacturing: the similarity of a firm's input mix to an industry's input mix predicts entry into that industry. We identify the direction of causality from the removal of size-based entry barriers in input markets which made firms more likely to enter industries that were similar in input use to their initial input mix. We rationalize this finding with a model of industry choice and economies of scope to estimate the importance of input capabilities in determining comparative advantage. Complementarities driven by input capabilities make a firm on average 5% (and up to 15%) more likely to produce in an industry. Entry barriers in input markets constrained the comparative advantage of firms and were equivalent to a 10.5 percentage point tariff on inputs
Business · Comparative advantage · Industrial organization · International trade · Economic and Technological Innovation · Firm Innovation and Growth · Global trade and economics
Prices, Plant Size, and Product Quality
Towards an economic theory of the multiproduct firm
The Product Space Conditions the Development of Nations
Across-Product Versus Within-Product Specialization in International Trade
Multiproduct Firms and Trade Liberalization
Imported Intermediate Inputs and Domestic Product Growth
Manufacturing Firms in Developing Countries
The network structure of economic output
Multi-Product Firms and Flexible Manufacturing in the Global Economy
Globalization and the Gains From Variety
What you export matters
A Practitioner’s Guide to Cluster-Robust Inference
Product Mix and Firm Productivity Responses to Trade Competition
Inter-Industry Technology Flows and Productivity Growth
Multiproduct Firms and Product Turnover in the Developing World
Firm-level comparative advantage
Exporters’ product vectors across markets
Does the use of imported intermediates increase productivity? Plant-level evidence
Text-Based Network Industries and Endogenous Product Differentiation
A Spatial Analysis of Sectoral Complementarity
Capabilities, Wealth, and Trade
The Division of Labor is Limited by the Extent of the Market
The Origins of Firm Heterogeneity
Inferior Inputs and the Theory of the Firm
Monopolistic Competition and Optimum Product Diversity under Firm Heterogeneity
Input Demand Functions for the Profit-Constrained Sales-Maximizer
Multi‐Product Exporters
Firms in International Trade
Organizational Capabilities and the Economic History of the Industrial Enterprise
| Unique citing works | 1 |
|---|---|
| Citations per year | 0,5 |
| Citation span | 2024 - 2024 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 1 |