The allocation of entrepreneurial effort and its implications on economic growth

Félix-Fernando Muñoz (), María Isabel Encinar and Francisco Javier Otamendi ()
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María Isabel Encinar: Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.
Francisco Javier Otamendi: Departmento de Economía Aplicada I, Universidad Rey Juan Carlos, Madrid.

No 2013/06, Working Papers in Economic Theory from Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History)

Abstract: The problem to allocate effort to innovation activities is defined and modelled for any single entrepreneur according to its propensity to innovate, which combines pure innovation and rent-seeking strategies. The allocation problem is solved both analytically and via simulation. The individual decisions measured in units of innovation are then aggregated to calculate the innovation quantity for a given population based on the distribution of heterogeneous entrepreneurs. The entrepreneurship rate and the implications for economic growth are also quantified. Consequently, policy makers should focus on reducing the entry barriers and the costs of production in order to stimulate the entrepreneurial activity and maximize the innovation quantity. They should also foster the attitude and propensity towards innovation.

Keywords: entrepreneurial heterogeneity; propensity to innovate; endogenous growth (search for similar items in EconPapers)
JEL-codes: M13 O12 O40 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2013-11
New Economics Papers: this item is included in nep-cse, nep-ent, nep-ino and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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