Corporate Finance and Comparative Advantage

Konferenzbeitrag

Since innovative firms are often financially constrained, access to external funds is important for the expansion of innovative industries. This paper reports four important results. First, comparative advantage is shaped by factor endowments as well as fundamental determinants of corporate finance. In particular, a larger equity ratio of firms and tough governance standards relax finance constraints and create a comparative advantage in innovative industries. Second, factor price equalization requires symmetry not only in the production but also in the intermediation technology. Third, a small degree of protection in the constrained sector can raise welfare by relaxing finance constraints if terms of trade effects are small. Fourth, a small degree of protection of the financially dependent industry might even raise world welfare if the other country is financially well developed.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Trade and Finance ; No. E2-V3

Classification and Topics

• Classification: Wirtschaft ; Neoclassical Models of Trade ; Corporate Finance and Governance: Government Policy and Regulation ; Business and Securities Law
• Subject: Finance constraints ; comparative advantage ; protection

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Keuschnigg, Christian ; Egger, Peter
• Event: Veröffentlichung
• (who): Verein für Socialpolitik
• (where): Frankfurt a. M.
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/37521
• Last update: 10.03.2025, 11:42 AM CET