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A Model of Intangible Capital (WP-22-36)

Nicolas Crouzet, Janice Eberly, Andrea Eisfeldt, and Dimitris Papanikolaou

The researchers propose a model that starts from the premise that intangible capital needs to be stored on some medium – software, patents, essential employees – before it can be utilized in production. Storage implies that intangible capital may be partially non-rival within the firm, leading to scale economies. However, storage can also compromise the ability of the firm to fully appropriate the returns generated by intangibles. The authors explore the implications of these two mechanisms for firm scale, scope, and investment decisions, and they outline their connection to recent macroeconomic and financial trends in the U.S.

Nicolas Crouzet, Associate Professor of Finance, Northwestern University

Janice Eberly, James R. and Helen D. Russell Professor of Finance and IPR Associate, Northwestern University

Andrea Eisfeldt, Laurence D. and Lori W. Fink Endowed Chair in Finance and Professor of Finance, University of California at Los Angeles

Dimitris Papanikolaou, John L. & Helen Kellogg Professor of Finance, Northwestern University

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