nep-ent New Economics Papers
on Entrepreneurship
Issue of 2005‒02‒06
four papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. Is Neoclassical Economics still Entrepreneurless? By Bianchi, Milo; Henrekson, Magnus
  2. Optimal R&D Investment Strategies with Quantity Competition under the Threat of Superior Entry By Ruslan Lukach; Peter M. Kort; Joseph Plasmans
  3. Finance Thy Growth: The Role of Occupational Choice By Ability-Heterogeneous Agents By Neville N. Jiang; Ping Wang; Haibin Wu
  4. Dynamic Cities and Creative Clusters By Weiping Wu

  1. By: Bianchi, Milo (Dept. of Economics, Stockholm School of Economics); Henrekson, Magnus (Dept. of Economics, Stockholm School of Economics)
    Abstract: We review and evaluate some recent contributions on the modeling of entrepreneurship within a neoclassical framework, analyzing how and to what extent the fundamental ingredients suggested in the social science literature were captured. We show how these approaches are important in stressing the main elements of a complex picture without being able to completely describe it. However, each modeling attempt focuses only on one specific feature of entrepreneurship. The entrepreneurial function broadly perceived eludes analytical tractability. As a consequence, the models can be useful in analyzing the effect of entrepreneurial behavior at an aggregate level, but not at explaining individual choices. From these observations we highlight how a simplistic interpretation of the existing mainstream approaches incorporating entrepreneurship runs the risk of leading to distortionary policy interventions.
    Keywords: Entrepreneurial Choice; Entrepreneurship; Innovation; Neoclassical Modeling; Uncertainty
    JEL: B41 D81 J23 L23 M13 O31
    Date: 2005–01–31
  2. By: Ruslan Lukach; Peter M. Kort; Joseph Plasmans
    Abstract: This paper studies R&D investment decisions of a firm facing the threat of new technology entry and subject to technical uncertainty. We distinguish four scenarios: inevitable entry, entry deterrence, entry blockade, and non-credible entry threat. The entry threat stimulates the incumbent to innovate in case entry prevention is possible, but discourages R&D if entry is inevitable. In the case of entry deterrence the incumbent successfully prevents entry by innovating. Greater technical uncertainty stimulates starting R&D and can result in implementation of more expensive research projects. The welfare analysis shows that the relation between welfare and entry cost and between welfare and uncertainty is non-monotonic.
    Keywords: investment under uncertainty, real options, R&D, competition
    JEL: C72 D21 O31
    Date: 2005
  3. By: Neville N. Jiang (Department of Economics, Vanderbilt University); Ping Wang (Department of Economics, Vanderbilt University, NBER); Haibin Wu (University of Alberta)
    Abstract: This paper develops an overlapping-generations model of finance and growth with intrinsic heterogeneity in loanable fund conversion ability, where agents make occupational choice between becoming entrepreneurs and becoming workers. For a given ability distribution, a decrease in the number of entrepreneurs may create an occupational choice effect, enhancing the rate of growth of the economy, as the average conversion ability of the remaining entrepreneurs is higher. A change in ability distribution parameters may generate a permanent growth effect. Due to the presence of an occupational choice effect, a scale effect and general-equilibrium wage adjustments, however, financial market thickness and income growth need not be positively correlated, in response to such distribution shifts. While both a reduction in the unit financial operation cost and an improvement in manufacturing productivity are growth enhancing, they have different effects on equilibrium prices and financial markup.
    Keywords: Occupational Choice, financial market, distribution and growth
    JEL: D90 G20 O4
    Date: 2002–04
  4. By: Weiping Wu
    Abstract: Wu focuses on how urban policies and the clustering of creative industries has influenced urban outcomes. The set of creative industries include those with output protectable under some form of intellectual property law. More specifically, this subsector encompasses software, multimedia, video games, industrial design, fashion, publishing, and research and development. The cities that form the basis for the empirical investigations are those where policy-induced transitions have been most evident, including Boston; San Francisco; San Diego; Seattle; Austin; Washington, D.C.; Dublin (Ireland); Hong Kong (China); and Bangalore (India). The key research questions are: • What types of cities are creative? • What locational factors are essential? • What are the common urban policy initiatives used by creative cities? The author explores the importance of the external environment for innovation and places it in the larger context of national innovation systems. Based on a study of development in Boston and San Diego, he isolates the factors and policies that have contributed to the local clustering of particular creative industries. In both cities, universities have played a major role in catalyzing the local economy by generating cutting-edge research findings, proactively collaborating with industries, and supplying the needed human capital. In addition, these two cities benefited from the existence of anchor firms and active industry associations that promoted fruitful university-industry links. Many cities in East Asia are aspiring to become the creative hubs of the region. But their investments tend to be heavily biased toward infrastructure provision. Although this is necessary, the heavy emphasis on hardware can lead to underinvestment in developing the talents and skills needed for the emergence of creative industries in these cities. This paper—a product of the Development Research Group—was prepared for the East Asia Prospect Study.
    Keywords: Education; Industry; Private Sector Development; Urban Development
    Date: 2005–02–02

This nep-ent issue is ©2005 by Marcus Dejardin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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