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Market Power and Innovation in the Intangible Economy - American Economic Association

  • Paper
  • #Intangibleasset #Monopoly
Maarten De Ridder
@DeRidderMaarten
(Author)
www.aeaweb.org
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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 sho... Show More

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 decline in productivity growth, consistent with the empirical trends observed since the mid-1990s.

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Jonathan Hazell @JADHazell · Sep 28, 2023
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Yeah! Go Maarten! Fantastic paper.
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