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Public Economics and Startup Entrepreneurs

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  • Robin Boadway
  • Jean-François Tremblay

Abstract

This paper surveys the various forms of market failure that can arise when innovating entrepreneurs consider entering an industry, and outlines possible implications for public policy. Externalities can arise from entrepreneurial activities such as spillover benefits from new innovations and spillover costs on incumbent firms. New entrepreneurs can also face various barriers to entry, either natural ones or those created by incumbent firms or government policy. They may also face problems in obtaining credit at efficient terms if there are information asymmetries in markets for either loan or equity finance. Finally, asymmetric information may also plague new firms in the hiring of workers. These various inefficiencies are of contradictory sign, some calling for an incentive to startup firms and other for the opposite. Thus, public policy is ambiguous and depends on the circumstances at hand.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 877.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_877

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Citations

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Cited by:
  1. Schilder, Dirk, 2006. "Public venture capital in Germany: task force or forced task?," Freiberg Working Papers 2006,12, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
  2. Christian Keuschnigg & Søren Bo Nielsen, 2004. "Taxation and Venture Capital Backed Entrepreneurship," International Tax and Public Finance, Springer, vol. 11(4), pages 369-390, 08.
  3. Ricardo Rozemberg & Daniela Ramos & Andrés López & Juan Carlos Hallak & Andrea González & Roberto Bisang, 2014. "Public-Private Collaboration on Productive Development Policies in Argentina," IDB Publications 84496, Inter-American Development Bank.
  4. Christian Keuschnigg, 2008. "Tax Policy for Venture Capital Backed Entrepreneurship," University of St. Gallen Department of Economics working paper series 2008 2008-07, Department of Economics, University of St. Gallen.
  5. Kanniainen, Vesa & Poutvaara, Panu, 2007. "Imperfect Transmission of Tacit Knowledge and Other Barriers to Entrepreneurship," IZA Discussion Papers 2859, Institute for the Study of Labor (IZA).
  6. Robin Boadway & Motohiro Sato, 2006. "Entrepreneurship and Asymmetric Information in Input Markets," Working Papers 1069, Queen's University, Department of Economics.
  7. Keuschnigg, Christian, 2003. "Optimal Public Policy for Venture Capital Backed Innovation," CEPR Discussion Papers 3850, C.E.P.R. Discussion Papers.
  8. Christian Keuschnigg & Soren Bo Nielsen, 2003. "Public Taxation and Venture Capital Backed Entrepreneurship," University of St. Gallen Department of Economics working paper series 2003 2003-17, Department of Economics, University of St. Gallen.
  9. Hoffmann, Florian & Inderst, Roman & Moslener, Ulf, 2013. "Taxing Externalities under Financing Constraints," MPRA Paper 53855, University Library of Munich, Germany.
  10. Christian Keuschnigg, 2003. "Public Policy and Venture Capital Backed Innovation," CESifo Working Paper Series 1066, CESifo Group Munich.

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