Monday, 8 July 2019

Untouchable firms: Market power, business dynamism, and productivity growth in the intangible economy

a column by Maarten de Ridder for VOX: CEPR’s Policy Portal

The slowdown of productivity growth, the decline of business dynamism, and the rise of market power and firm concentration are three trends that have attracted a lot of attention in academic and policy debates.

This column points to the rising use of intangible inputs as a unified explanation for these trends. Firms with high intangible adoption disrupt sectors and initially boost productivity, but negatively affect the entry of new firms and suppress the effect of R&D on innovation and growth in the long run.

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