NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Comparative Advantage and Heterogeneous Firms

Andrew B. Bernard, Stephen Redding, Peter K. Schott

NBER Working Paper No. 10668
Issued in August 2004
NBER Program(s):   ITI

This paper presents a model of international trade that features heterogeneous firms, relative endowment differences across countries, and consumer taste for variety. The paper demonstrates that firm reactions to trade liberalization generate endogenous Ricardian productivity responses at the industry level that magnify countries' comparative advantage. Focusing on the wide range of firm-level reactions to falling trade costs, the model also shows that, as trade costs fall, firms in comparative advantage industries are more likely to export, that relative firm size and the relative number of firms increases more in comparative advantage industries and that job turnover is higher in comparative advantage industries than in comparative disadvantage industries.

download in pdf format
   (535 K)

email paper

This paper is available as PDF (535 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2007. "Comparative Advantage and Heterogeneous Firms," Review of Economic Studies, Blackwell Publishing, vol. 74(1), pages 31-66, 01.

Users who downloaded this paper also downloaded these:
Bernard, Jensen, Redding, and Schott w13054 Firms in International Trade
Melitz w8881 The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity
Bernard, Eaton, Jenson, and Kortum w7688 Plants and Productivity in International Trade
Melitz and Ottaviano w11393 Market Size, Trade, and Productivity
Bernard, Redding, and Schott w12782 Multi-Product Firms and Trade Liberalization
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us