Specialization Across Goods and Export Quality

ABSTRACT This paper explores the link between specialization across goods and specialization within goods along the quality dimension. It develops a tractable many-country, many-industry Ricar- dian model with an integer number of heterogeneous firms producing each good, under a generic assumption about the distributions of firm e ciencies. In equilibrium, each country exports a range of qualities for each good that overlaps with the ranges of other countries following pat- terns that relate to wage di↵erences, trade frictions, and absolute advantage. Under plausible assumptions and conditional on wages, the average quality of a country’s exports within an industry increases with the country’s revealed comparative advantage in the industry