Productive and harmful entrepreneurship in a knowledge economy

Jürgen Antony, Torben Klarl and Erik Lehmann (erik.lehmann@wiwi.uni-augsburg.de)

Small Business Economics, 2017, vol. 49, issue 1, No 10, 189-202

Abstract: Abstract This paper develops an endogenous growth model with productive entrepreneurial activities and rent-seeking. Our purpose is to link contributions to the entrepreneurial and the endogenous growth literature. We deal with complementarity between productive entrepreneurship and harmful rent-seeking activities leading to potentially multiple equilibra in the economy. The degree of rent-seeking is endogenous in our model and is influenced by the economy’s legal and institutional framework as well as capital market imperfections. Policy which establishes the legal environment and financial institutions dealing with capital market imperfections together decides which of the potentially multiple equilibria is chosen by the economy. This institutional choice implies the solution to a trade-off between high economic growth on the one and a high level of productivity on the other hand.

Keywords: Entrepreneurship; Rent-seeking; Endogenous growth; Multiple equilibria (search for similar items in EconPapers)
JEL-codes: E2 G2 O4 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s11187-016-9822-x

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