Filip Mellgren

Private Know-How, Creative Destruction, and Growth

Job Market Paper

Paper (PDF)

Abstract. New-to-firm and exiting products tend to be small. I document this pattern in Swedish manufacturing data and study its implications for creative destruction’s contribution to growth. I develop a growth model in which innovation creates private know-how that competitors cannot inherit. This know-how can protect large products from replacement, concentrating replacement among smaller products where the same proportional quality gain contributes less to growth. In the calibrated model, creative destruction contributes 0.58 percentage points less to annual growth than in an accounting benchmark that removes the association between productive scale and protection while preserving replacement frequency. A uniform increase in R&D subsidies raises growth mainly through improvements to existing products. Targeted subsidies also change research at firms receiving no additional support.

Monopsony Power and Creative Destruction

R&R at American Economic Journal: Macroeconomics

Coauthors: Isabella Maassen, Jonas Overhage.

Paper (PDF)

Abstract. This study examines the effects of monopsony on macroeconomic productivity and growth using an endogenous growth model with heterogeneous firms facing upward-sloping labor supply curves. We find that this framework can rationalize the prevalence of unproductive yet innovating firms that would otherwise be crowded out by more productive competitors. In addition, we show that monopsony is an important determinant of product market power. Calibration to U.S. data confirms previous findings that monopsony decreases static productivity. However, it also leads to higher growth. We estimate that a 1% narrowing of the markdown increases the present value of output by about 1.08%. (JEL O31, O40, J42)

Skill Premium and Markups

Coauthors: Anders Åkerman, Horng Wong.

Abstract coming soon.