The Aggregate Effects of the Decline of Disruptive Innovation
Published in IWH Working Paper, 2023
This paper proposes a model that explains both recently documented facts about the decline of disruptive innovation and the decline in productivity growth as the result of large firms trying to monopolize technologies by poaching inventors from disruptive activities. To come to this conclusion, the paper builds an endogenous growth model with inventor labor markets on which firms can interact strategically. To inform this model, I perform an event study of the effect of disruptive inventions on their technology fields. I document that technology classes without disruption slowly trend towards incrementalism and that after a disruption, more patents get registered and research becomes less incremental.
Recommended citation: Richard Bräuer, The Aggregate Effects of the Decline of Disruptive Innovation, IWH Working Paper, 2023 http://Richardbraeuer.github.io/files/braeuer_disruptive.pdf