Intangible Capital, Non-rivalry, and Growth

We provide an answer to why growth may slow even in the face of technological improvements. Our focus is on the role of intangible assets. Intangible assets are distinct from physical capital in that they are comprised by information that requires a storage medium. A reduction in replication costs for intangible assets enables them to be less rivalrous in use, stimulating growth. However, we show how limits to excludability create a countervailing force. Depending on the strength of property-rights institutions, growth may slow even as technology lowers replication costs for intangibles, enhances their non-rivalry, and creates economies of scale and scope.