Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
Upside of Inequality Oxford Unintended Consequences

Sina Ates Federal Reserve Board
Date Posted:
Is Database:
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New Federal Reserve data shows a dramatic increase in patents reassigned to top 1% firms, from 30% in the 1980s to 55% by 2010, crowding out smaller firms and potentially impacting business dynamism.

U.S. business dynamism has been declining since 1980, with a marked acceleration post-2000, as evidenced by Federal Reserve data showing a significant increase in the share of patents reassigned to the top 1% of firms. In the 1980s, 30% of transacted patents were reassigned to these leading firms, but this figure surged to 55% by 2010. This shift has crowded out smaller firms, as the likelihood of patents being reassigned to small firms has dropped dramatically over the past two decades. The concentration in patent production and reassignment has surged, with large firms expanding their intellectual property arsenals. This trend suggests that the heavy use of patents by market leaders may have contributed to a decline in knowledge diffusion, impacting overall business dynamism and innovation.

Federal Reserve note implicitly supports the superstar firms thesis, finding that American business dynamism started declining in 1980, but accelerated in 2000. Note suggests that a steady decrease in diffusion has disproportionately impacted the decrease in overall dynamism as smaller firms share of patents declined. Data“…showsthe dramatic increase the share of patents reassigned to top 1 percent of firms with the largest patent stocks among all reassigned patents since the 1980s. Reciprocally, Panel Bshows the steady decline in the share of patent reassignments registered to small buyers over the same time period….”

Ufuk Akcigit and Sina Ates, “What Happened to U.S. Business Dynamism?,” Federal Reserve Board, February 14, 2020, https://www.federalreserve.gov/econres/notes/feds-notes/what-happened-to-us-business-dynamism-20200214.htm

“…As in patent registries, we observe stark trends in patent reassignments since the 1980s. Figure 3a focuses on the purchasing trends of the top 1 percent of firms with the largest patent portfolios. The figure reveals that while 30 percent of the transacted patents were reassigned to the firms with the largest patent stocks in the 1980s, the share went up to 55 percent by 2010. This drastic increase has crowded out small players in the market, as illustrated in Figure 3b. The figure shows the likelihood of a patent to be assigned to a small firm, conditional on that patent being transacted from another small firm and recorded. In the past two decades, the fraction of transacted patents that are reassigned to small firms has dropped dramatically, implying a shift of ownership from the hands of small firms to large ones. These figures reveal that concentration in patent production and reassignment has surged, and firms with the largest patent (knowledge) stock have further expanded their intellectual property arsenals. Given that patents are exclusively used to prevent competitors from using the patent holders’ technology, these trends can imply that the heavy use of patents by market leaders might have caused the decline in knowledge diffusion from the best to the rest….”

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