Working Paper No. 930

Cross-Industry Heterogeneity in Export Participation: The Role of Scale Economies in R&D

Published: October 5, 2012Pages: 30Keywords: International Trade; Trade Costs; Endogenous Sunk CostsJEL-codes: F12; L11; O30

Cross-Industry Heterogeneity in Export Participation: The Role of Scale Economies in R&D Shon Ferguson

This paper shows that the R&D intensity of an industry plays an important role in determining international trade patterns via its e¤ect 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 firm-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.

Shon Ferguson


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Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

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In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


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