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Invisible assets, visible power: How does intangible capital affect firm markups?

Year: 2026

Type: article

Abstract: This study theoretically and empirically examines the impact of intangible capital on firm markups. Following Altomonte et al. (2021), it develops a framework in which intangible capital affects markups through two channels: a positive “production efficiency” effect and a negative “market-based pricing” effect. Using panel data from the Annual Survey of Industrial Firms covering Chinese manufacturing firms over 1999–2007, the study empirically tests these mechanisms. The results show that intangible capital significantly increases firm markups, and the efficiency-enhancing effect dominates the pricing-pressure effect. These findings remain robust to alternative specifications and endogeneity corrections. Further analysis reveals substantial heterogeneity across firm types. Overall, the study provides micro-level evidence from a large developing economy on how intangible capital shapes firm markups, offering new insights into the economic effects of intangible investment.

Source: International Review of Economics & Finance

DOI: 10.1016/j.iref.2026.105299

Authors: Wen Yue, Jingyan Zhao

Institutions: Jiangnan University, Zhengzhou University

Language: English

Topic: Intellectual Capital and Performance Analysis

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Industry, innovation and infrastructure, Decent work and economic growth

Open Access status: gold

Estimated APC paid: $1,930