Does Firm Type Affect Factor Payments and Growth?

Abstract

When advanced technologies increase productivity as delays between inputs and output in-crease, a new reason for the existence of corporations appears. A corporation, like government, is potentially deathless and can rationally adopt technological advances with output delays longer than a proprietor’s lifespan because it can make long-term contracts that transfer the value of increased productivity in the distant future into present equity owner income, independent of paying factors their marginal product, or either human or physical capital acquisition, or contracting, transactions, information, and risk costs. Corporations can cause economic growth and income equality that cannot occur with unincorporated firms.