Modeling and measuring organization capital

Andrew Atkeson, Patrick J. Kehoe

Research output: Contribution to journalArticlepeer-review

179 Scopus citations

Abstract

Manufacturing plants have a clear life cycle: they are born small, grow substantially with age, and eventually die. Economists have long thought that this life cycle is driven by organization capital, the accumulation of plant-specific knowledge. The location of plants in the life cycle determines the size of the payments, or organization rents, plant owners receive from organization capital. These payments are compensation for the interest cost to plant owners of waiting for their plants to grow. We use a quantitative growth model of the life cycle of plants, along with U.S. data, to infer the overall size of these payments.

Original languageEnglish (US)
Pages (from-to)1026-1053
Number of pages28
JournalJournal of Political Economy
Volume113
Issue number5
DOIs
StatePublished - Oct 2005

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