A Theory of Entrepreneurial Rents in Endogenous Growth
- Slides: 17
A Theory of Entrepreneurial Rents in Endogenous Growth Leiden 11 February 2008 11 -02 -2008 Mark Sanders Utrecht School of Economics Max Planck Institute of Economics m. sanders@econ. uu. nl
Motivation Schumpeter and Endogenous Growth Theory Innovation vs. Invention Who gets rents? Opportunities vs. Patents/Ideas The ultimate source of growth Growth and Ideas; the basic model structure Consumers Producers/Intermediates Innovation Growth Back to “Reality”: Knowledge Creation Knowledge Spillover Incentives and Rewards
Growth and Ideas Basic Structure: Consumers 1. Need to be willing to save 2. Need to have latent demand for innovations Basic Structure: Producers 1. Need to make profit 2. Need to demand factors
Growth and Ideas Basic Structure: Inventors/Innovators 1. Make zero-profit (free entry) 2. Need to demand R&D factors Auction off ideas at willingness to pay: Produce ideas according to:
Growth and Ideas Basic Structure: 1. Growth is positive for positive R&D 2. Sub-optimal in case of spillovers Intra-temporal knowledge spillovers Inter-temporal knowledge spillovers Positive steady state growth requires: latent demand for innovation imperfect competition appropriation of rents by inventors/innovators increasing returns to scale in aggregate production Optimal growth requires stimulation of R&D
Back to “Reality”: Knowledge Creation: Is all knowledge creation invention? Is all invention also innovation? Knowledge Spillovers: Are knowledge spillovers automatic? Are knowledge spillovers localized? Are knowledge spillovers costly? Incentives and Rewards: What drives knowledge creation? What drives invention? What drives innovation?
A Model (Acs and Sanders 2007) Consumers of final good C Producers of final good C Labor Market Capital Market Producers of n intermediate goods
A Model (Acs and Sanders 2007) Consumers (standard)
A Model (Acs and Sanders 2007) Final Goods Producers
A Model (Acs and Sanders 2007) Final Goods Producers (R&D)
A Model (Acs and Sanders 2007) Intermediate Goods Producers
A Model (Acs and Sanders 2007) Intermediate Goods Producers (Entry) Entry-Arbitrage:
A Model (Acs and Sanders 2007) Equilibrium in labor market:
A Model (Acs and Sanders 2007) Equilibrium 1 A/n* A/n
A Model (Acs and Sanders 2007) Equilibrium Steady State:
A Model (Acs and Sanders 2007) Features: Spillover R&D=>Entrepreneurs proportional Spillover Entrepreneurs=>R&D less than proportional Growth Sub-Optimal Both R&D and Entrepreneurs should be supported R&D more than Entrepreneurs Rents reward commercialization (not knowledge creation) Opportunity is pure spillover from (process) R&D Process R&D is self sustaining/financed Captures spin-out/off Captures entrepreneurship Captures up stream spillovers (how? ) Captures downstream spillovers (how? )
A Model (Acs and Sanders 2007) In the tradition of Joseph Schumpeter we: …separate commercialization and invention, …allocate the monopoly rents to the entrepreneur, …assume opportunity to be a costless spillover/externality …but also endogenize knowledge creation. Innovation and Entrepreneurship should… …and can be put at the heart of growth theory.
- Neoclassical growth theory vs. endogenous growth theory
- Strategic entrepreneurial growth
- Cultural factors affecting entrepreneurial growth
- 22 rents
- A professional soccer player succeeds in scoring
- A summer resort rents rowboats to customers
- Endogenous variables
- Exogenous variables examples
- Endogenous covariates
- Endogenous variables
- Copyright
- Advanced industrial economics
- Endogenous attention
- The status withdrawal theory was proposed by
- Plant growth index
- Ground tissue
- Growthchain
- Primary growth and secondary growth in plants