Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
The Economics of Intangible Capital
Journal of Economic Perspectives
vol. 36,
no. 3, Summer 2022
(pp. 29–52)
(Complimentary)
Abstract
Intangible assets are a large and growing part of firms' capital stocks. Intangibles are accumulated via investment--foregoing consumption today for output in the future—but they lack a physical presence. Rather than stopping with this "lack," we instead focus on the positive properties of intangibles. Specifically, intangibles must be stored, so characteristics of the storage medium have important implications for their value and use. These properties include non-rivalry, allowing the intangible to be used simultaneously in different production streams, and limited excludability, which prevents the firm from capturing all the benefits or rents from the intangible. We develop these ideas in a simple way to illustrate how outcomes such as scalability and distribution of ownership follow. We discuss how intangibles can help to understand important trends in macroeconomics and finance, including productivity, factor shares, inequality, investment and valuation, rents and market power, and firm financing.Citation
Crouzet, Nicolas, Janice C. Eberly, Andrea L. Eisfeldt, and Dimitris Papanikolaou. 2022. "The Economics of Intangible Capital." Journal of Economic Perspectives, 36 (3): 29–52. DOI: 10.1257/jep.36.3.29Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D31 Personal Income, Wealth, and Their Distributions
- E25 Aggregate Factor Income Distribution
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- O34 Intellectual Property and Intellectual Capital
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