The Comparative Advantage of Firms

Resource-based theories propose that firms grow by diversifying into products use common capabilities. We provide evidence for common-input capabilities, using a policy removed entry barriers in input markets to show the similarity of firm’s and an industry’s mix determines firm production choices. model industry choice economies scope from When is estimated Indian manufacturing, complementarities make 5% more likely produce are quantitatively as important time-invariant drivers coproduction rates. Upstream were equivalent 9.5% tariff on inputs.