Bai, Xue; Chatterjee, Arpita; Krishna, Kala; Ma, Hong - National Bureau of Economic Research - 2022
This paper develops a new model with heterogeneous firms under perfect competition in a Heckscher-Ohlin-Samuelson setting. We show that trade need not make selection in the comparative advantage sector stricter as suggested by earlier work. Selection is driven by the capital intensity in entry...