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Buying and Selling Entrepreneurial Assets

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  • Kankanamge, Sumudu
  • Gaillard, Alexandre

Abstract

How are the options to buy and sell a business relevant for entrepreneurs? Prospective entrepreneurs value the purchase of mature firms while incumbents want to recover both the tangible and intangible value of their businesses upon exit. We introduce a theory of entrepreneurial assets transfer consistent with empirical evidence and centered around a businesses for sale market that lets entrepreneurs trade the maturity components of their firms. We find that shutting that market down leads to a substantial drop in aggregate output and alters the pool of firms, incentives to enter and exit, and the wealth distribution.

Suggested Citation

  • Kankanamge, Sumudu & Gaillard, Alexandre, 2020. "Buying and Selling Entrepreneurial Assets," TSE Working Papers 20-1078, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:124109
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    Keywords

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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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