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An agent-based model of entrepreneurship

Author

Listed:
  • Graham D. Newell
  • Matthew J. Holian

Abstract

Purpose - The purpose of this paper is to develop an agent-based model that highlights the role of entrepreneurship in the market process. Design/methodology/approach - The authors explore the effect of entrepreneurial alertness and transaction costs on two normative standards: the speed of price equilibration and the level of product diversity. Findings - Both higher alertness and lower transaction costs lead to faster equilibration, as expected. High alertness contributes to high product diversity, also as expected. However, and counter-intuitively, lower transaction costs actually leads to lower levels of product diversity, as markets equilibrate before entrepreneurs can discover many new products. Originality/value - The analysis provides new insight into entrepreneurship theory and policy.

Suggested Citation

  • Graham D. Newell & Matthew J. Holian, 2017. "An agent-based model of entrepreneurship," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 6(2), pages 259-270, August.
    • Handle: RePEc:eme:jepppp:jepp-01-2015-0003
    DOI: 10.1108/JEPP-01-2015-0003
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    Cited by:

    1. James Lee Caton, 2019. "Creativity in a theory of entrepreneurship," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 8(4), pages 442-469, September.

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