DP16570 Barriers to Creative Destruction: Large Firms and Non-Productive Strategies

Author(s): Salomé Baslandze
Publication Date: September 2021
Keyword(s):
JEL(s):
Programme Areas: Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16570

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