Market Power and Innovation in the Intangible Economy

Maarten De Ridder

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: 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 U.S. micro data. After initially boosting productivity, the rise of intangibles causes a significant decline in productivity growth, consistent with the empirical trends observed since the mid-1990s.

Keywords: Productivity; Growth; Business Dynamism; Intangible Inputs; Market Power (search for similar items in EconPapers)
Date: 2019-03-25
New Economics Papers: this item is included in nep-com, nep-cse, nep-dge, nep-eff, nep-ind and nep-tid
Note: mcd58
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Citations: View citations in EconPapers (46)

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Related works:
Journal Article: Market Power and Innovation in the Intangible Economy (2024)
Working Paper: Market power and innovation in the intangible economy (2024)
Working Paper: Market power and innovation in the intangible economy (2022)
Working Paper: Market Power and Innovation in the Intangible Economy (2019)
Working Paper: Market power and innovation in the intangible economy (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1931

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