Monday, April 22, 2019
Maryam Farboodi, Massachusetts Institute of Technology (MIT) - Sloan School of Management, Roxana Mihet, New York University (NYU) - Department of Economics, Thomas Philippon, New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER), Laura Veldkamp, New York University - Stern School of Business; National Bureau of Economic Research (NBER), theorize about Big Data and Firm Dynamics.
Abstract: We study a model where firms accumulate data as a valuable intangible asset. Data accumulation affects firms’ dynamics. It increases the skewness of the firm size distribution as large firms generate more data and invest more in active experimentation. On the other hand, small data-savvy firms can overtake more traditional incumbents, provided they can finance their initial money-losing growth. Our model can be used to estimate the market and social value of data.