Working Paper: CEPR ID: DP16570
Authors: Salom Baslandze
Abstract: This chapter reviews recent empirical evidence on large firms and non-productivestrategies that hinder creative destruction and reallocation. The focus is on threetypes of non-productive strategies: political connections, non-productive patenting,and anti-competitive acquisitions. Across different contexts using granular microdata sets, we overwhelmingly see that as firms gain market shares, they rely moreon non-productive strategies but reduce their productive, innovation-based strategies.I discuss theoretical channels, aggregate implications, and potentials for somepolicies.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Gaining market shares (D49) | Reliance on nonproductive strategies (D29) |
| Reliance on political connections (D73) | Lower creative destruction (O39) |
| Reliance on political connections (D73) | Lower innovation in the economy (O39) |
| Political connections (D72) | Employment increase (J23) |
| Political connections (D72) | Value added growth (O49) |
| Political connections (D72) | Productivity decrease (O49) |
| Firms connected to winning politicians (D72) | Firm size increase (L25) |