DP13489 Big Data and Firm Dynamics

Author(s): Maryam Farboodi, Roxana Mihet, Thomas Philippon, Laura Veldkamp
Publication Date: January 2019
Keyword(s): Big Data, firm size
Programme Areas: Industrial Organization, Monetary Economics and Fluctuations, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13489

We study a model where firms accumulate data as a valuable intangible asset. Data accumulation affects firms' dynamics. It increases the skewness of the firm size distribution as large firms generate more data and invest more in active experimentation. On the other hand, small data-savvy firms can overtake more traditional incumbents, provided they can finance their initial money-losing growth. Our model can be used to estimate the market and social value of data.