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Intangibles, Can They Explain the Dispersion in Return Rates?

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  • Bernd Görzig
  • Martin Gornig

Abstract

It is argued that the observed return rates on capital at firm-level have an upward bias if firms are producing with unobserved intangible capital. Using EUKLEED, a comprehensive firm level data base for Germany, this theoretical preposition is proved empirically. Furthermore, making unobserved capital observable the dispersion in return rates reduces dramatically. The results clearly support the assumption that a considerable part of the observed dispersion in return rates among firms can be contributed to unobserved capital formation in intangible capital. Firms with high input in intangibles also have an above average observed rate of return. However, the question to what extent a more intense use of intangibles can be the cause for higher return rates in the sense of both the monopoly-based and the innovation-based explanations is not answered.
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  • Bernd Görzig & Martin Gornig, 2013. "Intangibles, Can They Explain the Dispersion in Return Rates?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(4), pages 648-664, December.
    • Handle: RePEc:bla:revinw:v:59:y:2013:i:4:p:648-664
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    File URL: http://hdl.handle.net/10.1111/j.1475-4991.2012.00525.x
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    2. Nicholas Apergis & Chi Keung Lau, 2022. "Hotel Revenue Convergence: Evidence Across Star Hotels in Chinese Provinces," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 50(1), pages 37-51, June.
    3. Roth, Felix, 2019. "Intangible Capital and Labour Productivity Growth: A Review of the Literature," Hamburg Discussion Papers in International Economics 4, University of Hamburg, Department of Economics.
    4. Szalavetz, Andrea, 2012. "Az immateriális beruházások és a nem közvetlenül a termelésben foglalkoztatottak szerepe a gazdasági felzárkózásban [The role intangible investments and non-production workers play in economic catc," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1187-1206.
    5. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.

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    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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