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The Economic Impact of Moore’s Law

January 10, 2023

“Computing performance doubles every couple of years” is the popular re-phrasing of Moore’s Law, which describes the 500,000 – fold increase in the number of transistors on modern computer chips. But what impact has this 50 – year expansion of the technological frontier of computing had on the productivity of firms?

This paper focuses on the surprise change in chip design in the mid-2000s, when Moore’s Law faltered. No longer could it provide ever-faster processors, but instead it provided multicore ones with stagnant speeds.

Using the asymmetric impacts from the changeover to multicore, this paper shows that firms that were ill-suited to this change because of their software usage were much less advantaged by later improvements from Moore’s Law.