Competition, market concentration and intangibles in the United States
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Recent decades have seen profound technological and, flowing from this, economic and business changes. The rise of Information Technology and other intangible assets have changed how economies and businesses look. At the same time, (related) debates about competition and market power have become more prominent in the U.S. public debate. This paper has two aims. First, it (graphically) investigates the developments of the level of competition in the United States economy between 1987-2017 by employing a commonly used measure of industry concentration as a proxy for the level of competition, looking at seventy U.S. industries. Second, it is explored what role intangible assets play in these developments. A panel fixed effects is used to empirically determine the effect of intangible assets on the level of competition (i.e., market concentration) in the U.S. Results showed a strong decline of industry concentration. The panel estimations showed a significant and negative effect of intangibles on concentration, which is robust to various intangibility and concertation measures, indicating that higher intangible intensity might lead to lower concentration. Despite this, results are limited by the inclusion of only public firms, which could lead to biases in the dataset as, over time, already existing private firms go public.
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