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Schumpeterian Profits in the American Economy: Theory and Measurement

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Author Info
William D. Nordhaus () (Cowles Foundation, Yale University)

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Abstract

The present study examines the importance of Schumpeterian profits in the United States economy. Schumpeterian profits are defined as those profits that arise when firms are able to appropriate the returns from innovative activity. We first show the underlying equations for Schumpeterian profits. We then estimate the value of these profits for the non-farm business economy. We conclude that only a miniscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers.

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File URL: http://cowles.econ.yale.edu/P/cd/d14b/d1457.pdf
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Publisher Info
Paper provided by Cowles Foundation, Yale University in its series Cowles Foundation Discussion Papers with number 1457.

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Length: 27 pages
Date of creation: Apr 2004
Date of revision:
Handle: RePEc:cwl:cwldpp:1457

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Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
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Web page: http://cowles.econ.yale.edu/
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

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Related research
Keywords: Schumpeter; profits; innovation;

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Find related papers by JEL classification:
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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  1. Tomas J. Philipson & Anupam B. Jena, 2005. "Who Benefits from New Medical Technologies? Estimates of Consumer and Producer Surpluses for HIV/AIDS Drugs," NBER Working Papers 11810, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Darius Lakdawalla & Neeraj Sood, 2007. "The Welfare Effects of Public Drug Insurance," NBER Working Papers 13501, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Henrekson, Magnus & Sanandaji, Tino, 2008. "Entrepreneurship and the Theory of Taxation," Working Paper Series 732, Research Institute of Industrial Economics, revised 19 Aug 2009. [Downloadable!]
  4. Michael J. Rizzo, 2005. "The public interest in higher education," Proceedings, Federal Reserve Bank of Cleveland, pages 19-45. [Downloadable!]
  5. Bianchi, Milo & Henrekson, Magnus, 2005. "Is Neoclassical Economics still Entrepreneurless?," Working Paper Series in Economics and Finance 584, Stockholm School of Economics, revised 02 Feb 2005. [Downloadable!]
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  6. Philip Auerswald, 2008. "Entrepreneurship in the Theory of the Firm," Small Business Economics, Springer, vol. 30(2), pages 111-126, February. [Downloadable!] (restricted)
  7. William J. Baumol, 2007. "Returns in Cost Diseased Markets with Psychic Benefits: Two Apparently Conflicting Models of Equilibrium," Working Papers 07-16, Utrecht School of Economics. [Downloadable!]
  8. Douhan, Robin & Henrekson, Magnus, 2008. "Entrepreneurship and Second-best Institutions: Going Beyond Baumol’s Typology," Working Paper Series 766, Research Institute of Industrial Economics, revised 27 Aug 2009. [Downloadable!]
  9. Tomas J. Philipson & Anupam B. Jena, 2006. "Surplus Appropriation from R&D and Health Care Technology Assessment Procedures," NBER Working Papers 12016, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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