Club goods, intellectual property rights, and profitability in the information economy

Abstract

Are club goods becoming more widespread in developed economies, and, if so, what is the broader significance of this trend? Club goods are as salient for the profitability of non-financial firms as for finance. First, corporate strategy today largely revolves around the generation or acquisition of intellectual property rights and other club/franchise goods. Second, financialization is not just about the credit relationship between financial firms on the one side and non-financial corporate and household borrowers on the other, but also about Main Street's ability to use financial power to suppress competition in its own markets. Third, firms’ strategic reliance on IPRs and club goods more generally has magnified both profit and wage inequality in the broader economy. This inequality combines with changes in corporate structure to produce a significant part of the household level income inequality we currently observe in the United States. Fourth, all these processes are ineluctably political, because the state necessarily constitutes club or franchise goods, just like any property right. But the quantity and quality of those property rights is an indeterminate outcome of struggles among firms over the size of and shares of the pool of profits in a given national and global economy.

The role of intangible assets in explaining the investment–profit puzzle

“…For example, the antitrust case of the Federal Trade Commission against Google was dropped in the USA while not in Europe (Zingales, 2017, p. 123). Schwartz (2017) notes that…”

Introduction: Assetization and Technoscientific Capitalism

“…Such IPRs cover things like copyright, patents, and trademarks, and represent the main way that companies have sought to ensure that they can avoid the effects of the marginal zero cost of production (Rifkin 2014)-namely, once an initial investment in production has happened, subsequent costs of production tend toward zero. As content, in whatever form, has become almost costless to reproduce, companies and individuals have turned to IPRs to secure their profits (Schwartz 2017). According to Perzanowski and Schultz (2016), the ongoing institutional transformation of ownership in intangible assets has led to a shift in juristic operations from property rights to contract law, represented specifically by license agreements.…”

21st-century capitalism: structural challenges for universal health care

“…As Durand and Milberg ([21], p.34) point out, “US firms in particular have had high levels of profit and cash flow in the past 15 to 20 years associated with a disproportionately large payout to shareholders in the form of dividends and share buybacks and sluggish investment.” Pressures to deliver shareholder value mean that these firms have incentives to “reduce their physical and labor footprint in order to maximize returns on a much smaller set of physical assets” ([23], p.209). For instance, in 2014, 14 of the 15 US-based firms with the largest cash holdings were firms that “rely on intellectual property rights for their profitability” ([23], p.204). The top ten US firms by cash holdings in 2014 were all either Big Tech (with Apple in the lead) or Big Pharma [23].…”