event
Vilfredo Pareto Research Seminar
Monday
19
February
Gianmarco Ottaviano_VPRS

Comparative Advantage, Competition, and Firm Heterogeneity

Gianmarco Ottaviano, Professor in Economics at Bocconi University
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Maison de la Paix, S4 Petal 2

The Vilfredo Pareto Research Seminar is our Departmental weekly seminar, featuring external speakers in all areas of economics. The organizer for this academic year is Prof. Julia Cajal-Grossi (julia.cajal@graduateinstitute.ch).

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As part of the Vilfredo Pareto Research Seminar series, the International Economics Department at the Graduate Institute is pleased to invite you to the public talk Comparative Advantage, Competition, and Firm Heterogeneity given by Gianmarco Ottaviano, Professor of Economics at Bocconi University.

Gianmarco Ottaviano is also research fellow of CEPR London (International Trade and Regional Economics Program), Bruegel Brussels, FEEM Milan, CReAM London,  CSLA Turin, CSIC Barcelona, GEP Nottingham and co-authored many works in international trade, urban economics and economic geography, including "Economic Geography and Public Policy" (Princeton University Press, 2003) and "Agglomeration and economic geography" (Handbook of Regional Science and Urban Economics, 2004).

Abstract: This paper examines how firm heterogeneity shapes comparative advantage. Drawing on matched customs and firm-level data from China, we find that export participation, exported product scope and product mix, and firm mix within industries vary systematically with firms' labour intensity. This is rationalized by a model in which firms from industries of comparative disadvantage face tougher competition in the export market. The competitive effect induces reallocation within and across firms and generates endogenous Ricardian comparative advantage, which dampens ex ante comparative advantage. Using sufficient statistics to measure and decompose comparative advantage, we find that the dampening mechanism is quantitatively important in shaping comparative advantage for a calibrated Chinese economy.

This talk is held as part of the Geneva Trade and Development Workshop (GTDW).