The Economics of Intangible Capital

Nicolas Crouzet, Janice Eberly, Andrea L. Eisfeldt and Dimitris Papanikolaou

Journal of Economic Perspectives, 2022, vol. 36, issue 3, 29-52

Abstract: Intangible assets are a large and growing part of firms' capital stocks. Intangibles are accumulated via investment--foregoing consumption today for output in the future—but they lack a physical presence. Rather than stopping with this "lack," we instead focus on the positive properties of intangibles. Specifically, intangibles must be stored, so characteristics of the storage medium have important implications for their value and use. These properties include non-rivalry, allowing the intangible to be used simultaneously in different production streams, and limited excludability, which prevents the firm from capturing all the benefits or rents from the intangible. We develop these ideas in a simple way to illustrate how outcomes such as scalability and distribution of ownership follow. We discuss how intangibles can help to understand important trends in macroeconomics and finance, including productivity, factor shares, inequality, investment and valuation, rents and market power, and firm financing.

JEL-codes: D21 D31 E25 G31 G32 J24 O34 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (17)

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DOI: 10.1257/jep.36.3.29

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