We develop a model demonstrating conditions under which firms will invest in the general training of their workers, and show that firms’ incentives to invest in general training are increasing in task complexity. Workers’ heterogeneous observable innate ability affects the variety of tasks that can be performed within a firm. This gives monopsony power to firms with ‘better’ workforces. As a re...

Ability of managers and other nonproduction professionals is key for the productivity of firms. Hence, the assignment of heterogeneous nonproduction workers across firms determines the distribution of productivity. In turn, the transmission of productivity differences into profit differences — resulting from product market competition — determines firms’ willingness to pay for higher managerial...

Technological Innovation, Financial Fragility and Complex Dynamics In this paper we suggest a scaling approach to business cycles. We develop a heterogeneous interacting agents (HIAs) model that replicates well known industrial dynamics stylized facts, as the power law distribution of firms’ size and the Laplace distribution of firms’ growth rates. In particular, the power law is a persistent b...

The paper proposes a model where heterogeneous firms choose whether to undertake R&D or not. Depending on R&D choice, innovative firms are more productive, have larger investment opportunities and lower own funds than non-innovating firms. As a result, innovative firms are financially constrained while standard firms are not. The efficiency of the financial sector and a coun-try's institutional...

a r t i c l e i n f o JEL classification: F12 F15 R11 R12 Keywords: Heterogeneous taste and quality Spatial selection Economic geography Agglomeration Home market effect In this paper, we develop an economic geography model in which firms sell product varieties with heterogeneous demands. We show that firms that sell products with higher demand choose to establish their plants in larger countri...

This paper investigates the role of productivity on a firm’s organizational choice. We set up an industry-equilibrium model in which heterogeneous firms concurrently choose their type of inputs, ownership structure and location of production. In choosing their type of inputs, firms trade off the extra customization costs of adopting generic inputs against the reduced hold-up friction that gener...

This paper contributes to the examination of factors that affect the decision to export of firms. Using a panel of firm-level data in Vietnam’s manufacturing sector, we test for the role of sunk costs and heterogeneous characteristics of firms in determining firms’ probability of exporting. Under a framework that controls for unobserved heterogeneity among firms, we find that the sunk entry cos...

Endowment based economic models with constant returns to scale and perfect competition have been a primary theoretical basis for analyzing political preferences of domestic actors. However, it is well known that such class of model is inadequate in explaining the large volume of intra-industry trade. How do we understand distributive consequences of trade policy of industrialized countries espe...