Monopolistic Competition and Entrepreneurial RiskRTaking -Too many Cooks Spoil the Broth (but Everyone is better off) -
This paper investigates the effects of monopolistic competition on entrepreneurial riskRtaking in a general equilibrium model. In this context, occupational choice of risk averse agents is biased towards rm ownership. In this case, the inef ciencies due to the presence of nonRdiversi able risk are partly compensated by inef ciencies arising from imperfect competition. Comparative static results show that too many rms remain in the market for an increase in the degree of risk aversion, thereby mutually deteriorating pro t opportunities, which provides an explanation for the empirically observed comparably low risk premium on entrepreneurial risk.
|Date of creation:||Oct 2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (0511) 762-5350
Fax: (0511) 762-5665
Web page: http://www.wiwi.uni-hannover.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maitreesh Ghatak & Massimo Morelli & Tomas Sjostrom, 2002.
"Credit Rationing, Wealth Inequality, and Allocation of Talent,"
STICERD - Theoretical Economics Paper Series
441, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Maitreesh Ghatak & Massimo Morelli & Tomas Sjoström, 2001. "Credit rationing, wealth inequality, and allocation of talent," ICER Working Papers - Applied Mathematics Series 23-2001, ICER - International Centre for Economic Research.
- Maitreesh Ghatak & Massimo Morelli & Tomas Sjostrom, 2002. "Credit rationing, wealth inequality and allocation of talent," LSE Research Online Documents on Economics 5922, London School of Economics and Political Science, LSE Library.
- Maitreesh Ghatak & Massimo Morelli & Tomas Sjostrom, 2002. "Credit Rationing, Wealth Inequality, and Allocation of Talent," Economics Working Papers 0026, Institute for Advanced Study, School of Social Science.
- John Y. Campbell, 1995.
"Understanding Risk and Return,"
Harvard Institute of Economic Research Working Papers
1711, Harvard - Institute of Economic Research.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977.
"Monopolistic Competition and Optimum Product Diversity,"
American Economic Review,
American Economic Association, vol. 67(3), pages 297-308, June.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
- Ghatak, Maitreesh & Morelli, Massimo & Sjostrom, Tomas, 2001. "Occupational Choice and Dynamic Incentives," Review of Economic Studies, Wiley Blackwell, vol. 68(4), pages 781-810, October.
- Carroll, Christopher D. & Samwick, Andrew A., 1997.
"The nature of precautionary wealth,"
Journal of Monetary Economics,
Elsevier, vol. 40(1), pages 41-71, September.
- John Heaton & Deborah Lucas, 2000. "Portfolio Choice and Asset Prices: The Importance of Entrepreneurial Risk," Journal of Finance, American Finance Association, vol. 55(3), pages 1163-1198, 06.
- Blanchflower, D.G. & Oswald, A., 1991.
"What Makes an Entrepreneur?,"
Economics Series Working Papers
99125, University of Oxford, Department of Economics.
- Cramer, J. S. & Hartog, J. & Jonker, N. & Van Praag, C. M., 2002. "Low risk aversion encourages the choice for entrepreneurship: an empirical test of a truism," Journal of Economic Behavior & Organization, Elsevier, vol. 48(1), pages 29-36, May.
- Boadway, Robin & Marchand, Maurice & Pestieau, Pierre, 1991.
"Optimal linear income taxation in models with occupational choice,"
Journal of Public Economics,
Elsevier, vol. 46(2), pages 133-162, November.
- BOADWAY, Robin & MARCHAND, Maurice & PESTIEAU, Pierre, . "Optimal linear income taxation in models with occupational choice," CORE Discussion Papers RP -958, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
When requesting a correction, please mention this item's handle: RePEc:han:dpaper:dp-303. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Heidrich, Christian)
If references are entirely missing, you can add them using this form.