 Entrepreneurship and Growth - An Overlapping Generations Approach -Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät Abstract: This paper discusses a two-sector neoclassical overlapping generations economy with intermediate and final goods in the spirit of Romer (1990). The risk averse agents engage in one of two alternative occu pations: either firrm-ownership in the intermediate goods sector, char acterized by monopolistic competition, or employment as a worker in this sector. The occupational choice under risk endogenizes the num ber of firms and products in the intermediate goods industry. Since entrepreneurial profits are stochastic, an inefficiently low number of agents chooses firm-ownership. We find that expected profits of mo nopolists do not vanish in equilibrium and that the level of economic performance is inefficiently low due to the presence of risk. This result carries over to a suboptimally low growth rate in an enodgenous growth context. Keywords: OLG; occupational choice; monopolistic competition; growth (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:han:dpaper:dp-304 Access Statistics for this paper More papers in Hannover Economic Papers (HEP) from Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät Contact information at EDIRC. |
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