Firm Formation with Complementarities: The Role of the Entrepreneur

Christian Roessler () and Philipp Koellinger

No 09-003/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We model the emergence of organization forms in a game between prospective entrepreneurs. Complementary roles arise endogenously in a way that admits a stable assignment of workers to firms. This contrasts with existing work on job matching, where stability typically requires workers to be substitutes. Our approach demonstrates that the labor market selection of entrepreneurs and their profit-maximizing choices lead to specific technologies in which certain workers are substitutes and others are complements. We give a simple characterization of equilibrium firm memberships and organizations. We show that payoffs in our non-cooperative solution lie in the core of the corresponding cooperative game, and can be obtained in a decentralized process that reduces information and planning requirements for the entrepreneur.

Keywords: Entrepreneurship; job matching; occupational choice; firm formation; firm organization (search for similar items in EconPapers)
JEL-codes: L26 J24 C78 D44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-ent
Date: 2009-01-13, Revised 2009-06-03
View list of references

Downloads: (external link)
http://www.tinbergen.nl/discussionpapers/09003.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:dgr:uvatin:20090003

Access Statistics for this paper

More papers in Tinbergen Institute Discussion Papers from Tinbergen Institute
Series data maintained by Walther Schoonenberg ().