The Allocation of Entrepreneurial Talent and Destructive Entrepreneurship

Mark Sanders and Utz Weitzel

No wp-2010-046, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Entrepreneurship is generally regarded as a force of change, innovation, and development in modern economies. Entrepreneurs bring new and better products to markets, restore allocative efficiency through arbitrage and reinvest their profits. However, it has been argued that the same energy and talent can also be allocated to unproductive ends and reduce total welfare. In this paper we present a model that analyzes the allocation of a given entrepreneurial talent over destructive and productive activities. We show that in this model two stable equilibria can emerge.

Keywords: Economic development; Entrepreneurship; Institutional economics (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (3)

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