Publication Date: April 2004
The present study examines the importance of Schumpeterian proﬁts in the United States economy. Schumpeterian proﬁts are deﬁned as those proﬁts that arise when ﬁrms are able to appropriate the returns from innovative activity. We ﬁrst show the underlying equations for Schumpeterian proﬁts. We then estimate the value of these proﬁts for the non-farm business economy. We conclude that only a miniscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the beneﬁts of technological change are passed on to consumers rather than captured by producers.
Schumpeter, Proﬁts, Innovation
JEL Classification Codes: O30, O31, O4