TY  - BOOK
AU  - Gutiérrez,Germán
AU  - Philippon,Thomas
ED  - National Bureau of Economic Research.
TI  - Declining Competition and Investment in the U.S.
T2  - NBER working paper series
PY  - 2017///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - July 2017; Hardcopy version available to institutional subscribers
N2  - 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
UR  - https://www.nber.org/papers/w23583
UR  - http://dx.doi.org/10.3386/w23583
ER  -