Barriers to Creative Destruction: Large Firms and Non-Productive Strategies

Salome Baslandze

No 16570, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This chapter reviews recent empirical evidence on large firms and non-productive strategies that hinder creative destruction and reallocation. The focus is on three types of non-productive strategies: political connections, non-productive patenting, and anti-competitive acquisitions. Across different contexts using granular micro data sets, we overwhelmingly see that as firms gain market shares, they rely more on non-productive strategies but reduce their productive, innovation-based strategies. I discuss theoretical channels, aggregate implications, and potentials for some policies.

Date: 2021-09
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Working Paper: Barriers to Creative Destruction: Large Firms and Nonproductive Strategies (2021)
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