Entrepreneurial Competition and Its Impact on the Aggregate Economy
This paper models entrepreneurship as the entrepreneur's information processing activity in order to predict changes in demand and reallocate resources. The results show that allocative efficiency---and therefore aggregate productivity---increases through intensified competition by entrepreneurs grasping at opportunities. This fierce competition leads to price reductions that result in the improvement of measured aggregate productivity. The price reduction also forces relatively less able entrepreneurs to become workers. As resources are then dealt with only by relatively talented entrepreneurs, this selection effect also increases aggregate productivity. The paper also discusses how the selection effect influences the distribution of firm size.
|Date of creation:||Sep 2008|
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- Marcus Asplund & Volker Nocke, 2006. "Firm Turnover in Imperfectly Competitive Markets -super-1," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 295-327.
- Katsuya Takii, 2004.
"Fiscal Policy and Entrepreneurship,"
Econometric Society 2004 Far Eastern Meetings
698, Econometric Society.
- Katsuya Takii, 2004. "Fiscal Policy and Entrepreneurship," Econometric Society 2004 North American Summer Meetings 320, Econometric Society.
- Katsuya Takii, 2004. "Fiscal Policy and Entrepreneurship," Macroeconomics 0406006, EconWPA.
- David Thesmar & Mathias Thoenig, 2000.
"Creative Destruction and Firm Organization Choice,"
Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers)
- Jose V. Rodriguez Mora & John Hassler, 2000. "Intelligence, Social Mobility, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 888-908, September.
- Katsuya Takii, 2004. "The Value of Adaptability," Industrial Organization 0406004, EconWPA.
- Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March.
- Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb..
- Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
- Schumpeter, Joseph A., 1947. "The Creative Response in Economic History," The Journal of Economic History, Cambridge University Press, vol. 7(02), pages 149-159, November.
- Marcus Asplund & Volker Nocke, 2003. "Firm Turnover in Imperfectly Competitive Markets," PIER Working Paper Archive 03-010, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Casson, Mark, 2005. "Entrepreneurship and the theory of the firm," Journal of Economic Behavior & Organization, Elsevier, vol. 58(2), pages 327-348, October.
- Katsuya Takii, 2011.
"Entrepreneurial Efficiency: Theory,"
The Japanese Economic Review,
Japanese Economic Association, vol. 62(2), pages 196-214, 06.
- Katsuya Takii, 2003.
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 80-98, January.
- Katsuya Takii, 2000. "Prediction Ability," Econometric Society World Congress 2000 Contributed Papers 1411, Econometric Society.
- Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-846, September.
- Scott Shane, 2000. "Prior Knowledge and the Discovery of Entrepreneurial Opportunities," Organization Science, INFORMS, vol. 11(4), pages 448-469, August.
- Mills, David E & Schumann, Laurence, 1985. "Industry Structure with Fluctuating Demand," American Economic Review, American Economic Association, vol. 75(4), pages 758-767, September.
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