The Scale Effect: A Comparative Industry-Level Analysis

We reassess, with industry-level data, the scale effect from trade protection, by means of a comprehensive fixed-cost variable, composing both technology coeficient and firms size, and a comparative (international) analysis. Evidence is based on Brazil’s manufacturing industries during its import-substitution industrialization, comparatively to the USA. The panel-data analysis clearly shows a correlation between comparative increases in the number of firms with average costs, corroborating the scale (entry) effect. See full paper See full paper