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Market Power and Innovation in the Intangible Economy

De Ridder, Maarten

The American economic review, 2024-01, Vol.114 (1), p.199-251 [Periódico revisado por pares]

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Título:
Market Power and Innovation in the Intangible Economy
Autor: De Ridder, Maarten
É parte de: The American economic review, 2024-01, Vol.114 (1), p.199-251
Descrição: This paper offers a unified explanation for the slowdown of productivity growth, the decline in business dynamism, and the rise of market power. Using a quantitative framework, I show that the rise of intangible inputs, such as software, can explain these trends. Intangibles reduce marginal costs and raise fixed costs, which gives firms with high-intangible adoption a competitive advantage, in turn deterring other firms from entering. I structurally estimate the model on French and US micro data. After initially boosting productivity, the rise of intangibles causes a decline in productivity growth, consistent with the empirical trends observed since the mid-1990s. (JEL D22, D24, E23, L11, O31, O47)
Idioma: Inglês

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