The Rise of Star Firms : Intangible Capital and Competition
There is a divergence in the returns of top-performing firms and the rest of the economy, especially in industries that rely on a skilled labor force, raising concerns about their market power. This paper shows that the divergence is explained by t...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/957151556541265334/The-Rise-of-Star-Firms-Intangible-Capital-and-Competition http://hdl.handle.net/10986/31597 |
| Summary: | There is a divergence in the returns of
top-performing firms and the rest of the economy, especially
in industries that rely on a skilled labor force, raising
concerns about their market power. This paper shows that the
divergence is explained by the mismeasurement of intangible
capital. Compared with other firms, star firms produce more
per dollar of invested capital, have higher growth,
innovation, and productivity and are not differentially
affected by exogenous competitive shocks. Their pricing
power supports their high intangible capital investment.
Some exceptional firms may pose concerns due to their
potential to foreclose competition in the future. |
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