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Barriers to Creative Destruction: Large Firms and Nonproductive Strategies

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  • Salomé Baslandze

Abstract

This working paper reviews recent empirical evidence on large firms and nonproductive strategies that hinder creative destruction and reallocation. The focus is on three types of nonproductive strategies: political connections, nonproductive patenting, and anticompetitive acquisitions. Across different contexts using granular micro data sets, we overwhelmingly see that as firms gain market share, they increasingly rely on nonproductive strategies but reduce their productive, innovation-based strategies. I also discuss theoretical channels, aggregate implications, and potentials for some policies.

Suggested Citation

  • Salomé Baslandze, 2021. "Barriers to Creative Destruction: Large Firms and Nonproductive Strategies," FRB Atlanta Working Paper 2021-23, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedawp:93478
    DOI: 10.29338/wp2021-23
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    Cited by:

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    More about this item

    Keywords

    creative destruction; innovation; growth; patents; political connections; firm dynamics;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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