Publisher:
Research Inst. of Industrial Economics, Stockholm
This paper shows that the R&D intensity of an industry plays an important role in determining international trade patterns via its effect on scale economies. I first develop a model of trade with heterogeneous firms where firms compete with each...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Signature:
DS 206 (930)
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This paper shows that the R&D intensity of an industry plays an important role in determining international trade patterns via its effect on scale economies. I first develop a model of trade with heterogeneous firms where firms compete with each other by spending on fixed product development costs such as R&D. The model predicts that a larger share of firms are exporters in industries where R&D is a large component of total costs. The model also predicts that R&D-intense industries are less sensitive to trade costs. I find empirical support for these predictions using fi rm-level data for Swedish manufacturing industries. The results also highlight the importance of controlling for firm size when measuring the firm extensive margin of exports. -- International Trade ; Trade Costs ; Endogenous Sunk Costs
