Schumpeterian Profits in the American Economy: Theory and Measurement

William D. Nordhaus

NBER Working Paper No. 10433
Issued in April 2004
NBER Program(s):The Economic Fluctuations and Growth Program, The Productivity, Innovation, and Entrepreneurship Program

The present study examines the importance of Schumpeterian profits in the United States economy. Schumpeterian profits are defined as those profits that arise when firms are able to appropriate the returns from innovative activity. We first show the underlying equations for Schumpeterian profits. We then estimate the value of these profits for the non-farm business economy. We conclude that only a minuscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers.

A non-technical summary of this paper is available in the October 2004 NBER Digest.  You can sign up to receive the NBER Digest by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w10433

Users who downloaded this paper also downloaded* these: