Amimetic assets and persistent profits under competition

Abstract

Some industries are very dynamically competitive and characterized by much entrepreneurial innovation. Others are oligopolistic and still others are known for state favors and regulatory rents. In a market economy, competitive pressures cause businesses to continually adapt to changing conditions. Different approaches can be taken – entrepreneurial innovation, consolidation, and rent seeking are examples. This paper examines the characteristics of firms and productive assets that preserve an innovative, dynamic economy and hedge against rent seeking and crony capitalism. In an innovative, dynamic economy, profits can only be sustained against competition if a business has productive assets that offer a unique advantage over competitors. These assets can be termed amimetic assets, a term based on the Greek word amimitos, meaning “inimitable.” When these assets can be acquired or developed through entrepreneurial discovery, business models can be oriented to exploit them. If this is more difficult in an industry, it will be more likely to be characterized by regulation and regulatory rents. Amimetic assets are thus fundamental to an innovative economy and are a major factor among many in determining whether a business obtains profits through repeated entrepreneurial discovery or rent seeking.