“Firm-Level Comparative Advantage” by Professor Matthieu CROZET
Wednesday, 24 Feb 2016 | 10:30am - 12:00noon
1236, K.K. Leung Bldg
STRATEGY SEMINAR
Speaker:
Professor Matthieu CROZET
Professor of Economics
Paris-Sud University and CEPII
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.
