Song Ma - Yale School of Management
The Institute of Economics will hold a webinar meeting as part of its Seminar Series on Tuesday, January 18, 2021: Song Ma from the Yale School of Management will present the paper "Technological Obsolescence".
This paper proposes a new measure of technological obsolescence using detailed patent data. Using this measure, we present two sets of results. First, firms' technological obsolescence foreshadows substantially lower growth, productivity, and reallocation of capital. This finding applies mainly for obsolescence of core innovation and embodied innovation, and it is stronger in competitive product markets. Second, in stock markets, high-obsolescence firms under-perform low-obsolescence firms by 7 percent annually. Using analyst forecast data, we show this is due to a systematic overestimation of future profits of obsolescent firms. The measure contains incremental information about firm innovation relative to measures focusing on new innovation.
The paper is available here.
The seminar will be held online at the following link.