Declining Competition and Investment in the U.S.
TLDR
The U.S. business sector has under-invested relative to Tobin's Q since the early 2000's, and as discussed by the authors argue that declining competition is partly responsible for this phenomenon.Abstract:
The U.S. business sector has under-invested relative to Tobin's Q since the early 2000's. We argue that declining competition is partly responsible for this phenomenon. We use a combination of natural experiments and instrumental variables to establish a causal relationship between competition and investment. Within manufacturing, we show that industry leaders invest and innovate more in response to exogenous changes in Chinese competition. Beyond manufacturing we show that excess entry in the late 1990's, which is orthogonal to demand shocks in the 2000's, predicts higher industry investment given Q. Finally, we provide some evidence that the increase in concentration can be explained by increasing regulations.read more
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References
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The China Syndrome: Local Labor Market Effects of Import Competition in the United States
TL;DR: This paper analyzed the effect of Chinese import competition between 1990 and 2007 on US local labor markets, exploiting cross-market variation in import exposure stemming from initial diffe cerence to US labor markets.
Journal ArticleDOI
Relaxing price competition through product differentiation
Avner Shaked,John Sutton +1 more
TL;DR: In this paper, the authors present a very particular model of a market equilibrium in which two potential entrants will choose to enter the industry, and both will make positive profits, and they will choose both the specification of their respective products, and their prices.
Journal ArticleDOI
The Venture Capital Revolution
Paul A. Gompers,Josh Lerner +1 more
TL;DR: In this article, the authors draw together the empirical academic research on venture capital and highlight what is still not known, focusing on the role that venture capitalists play in mitigating agency conflicts between entrepreneurial firms and outside investors.
Journal ArticleDOI
Equity Premia as Low as Three Percent? Evidence from Analysts' Earnings Forecasts for Domestic and International Stock Markets
James J. Claus,Jacob K. Thomas +1 more
TL;DR: In this article, the authors estimate the equity premium from the discount rate that equates market valuations with prevailing expectations of future flows, and find that the average equity premium is around three percent (or less) in the United States and five other markets.
Posted Content
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