Seminar No. 228

Title: Comparative Advantage, Competition, and Firm Heterogeneity

Speaker: Hanwei Huang, City University of Hong Kong

Time: June 5, 2020    13:30-15:00    (GMT+8:00)

Venue: Online

About the speaker:

Hanwei Huang is an Assistant Professor at the Department of Economics and Finance, City University of Hong Kong. He obtained Ph.D. in Economics from the London School of Economics. His main research interests are international trade, economic development, industrial organization, and economic history.

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' labor 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 comparative advantage which dampens ex-ante comparative advantage. We develop a new sufficient statistics approach to measure and decompose comparative advantage and find the dampening mechanism is quantitatively important in shaping comparative advantage for a calibrated Chinese economy.

Interested in this event? Please contact Feiyan at feiyantang@jnu.edu.cn by June 4 (12 PM) to register.