Schumpeterian Profits in the American Economy: Theory and Measurement
William D. Nordhaus
Yale University - Department of Economics; National Bureau of Economic Research (NBER)
Cowles Foundation Discussion Paper No. 1457
The present study examines the importance of Schumpeterian profits in the United States economy. Schumpeterian profits are defined as those profits that arise when firms are able to appropriate the returns from innovative activity. We first show the underlying equations for Schumpeterian profits. We then estimate the value of these profits for the non-farm business economy. We conclude that only a miniscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers.
Number of Pages in PDF File: 28
Keywords: Schumpeter, profits, innovation
JEL Classification: 030, 031, 04working papers series
Date posted: April 30, 2004
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