Department Brown Bag Seminars

Wednesday 12:00 noon 1:05 p.m.
Online

Fall Quarter 2021


October 20
Dohyeon Lee
"Selective Accumulation of Ideas: Accounting for the Decline in Entry Rate and Productivity Growth"
Abstract: 
This paper proposes a novel explanation for the decline in the entry rate of new firms and aggregate productivity growth. Improvement in the pool of incumbent firms over time reduces the profitability of potential entrants, making it harder for entrants to find profitable ideas for business and thus lowering the entry rate. This mechanism cannot be captured in stationary models, which implicitly impose disadvantages on incumbent firms relative to entrants. To overcome this limitation, I propose a novel framework that achieves a fair comparison between incumbents and entrants. I show that entrants in the U.S. have kept up with the incumbents on average over the past 40 years.