The comparative advantage of firms

Boehm, Johannes, Dhingra, Swati ORCID: 0000-0001-5468-3415 and Morrow, John (2019) The comparative advantage of firms. CEP Discussion Papers (1614). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

Resource based theories propose that firms grow by diversifying into products which use common capabilities. We provide evidence for common input capabilities using a policy that removed entry barriers in input markets to show that the similarity of a firm's and industry's input mix determine firm production choices. We model industry choice and economies of scope from input capabilities. Estimating the model for Indian manufacturing, input complementarities make firms 5% more likely to produce in an industry and are quantitatively as important as time-invariant drivers of co-production rates. Upstream entry barriers were equivalent to a 9.5% tariff on inputs.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information:	© 2022 The Authors, revised
Divisions:	Economics Centre for Economic Performance
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce H Social Sciences > HB Economic Theory T Technology > T Technology (General)
JEL classification:	F - International Economics > F1 - Trade > F11 - Neoclassical Models of Trade L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification and Scope, Age, Profit, and Sales O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O30 - General M - Business Administration and Business Economics; Marketing; Accounting > M2 - Business Economics > M20 - General
Date Deposited:	29 Nov 2019 11:12
Last Modified:	09 May 2025 01:46
URI:	http://eprints.lse.ac.uk/id/eprint/102596

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