A Gap for Me: Entrepreneurs and Entry
نویسندگان
چکیده
We present a theory of entrepreneurial entry and exit decisions. Knowing their own managerial talent, entrepreneurs decide which market to enter, where markets differ in size. We obtain a striking sorting result: each entrant in a large market is more efficient than any entrepreneur in a smaller market. The result obtains since competition is endogenously more intense in larger markets. The sorting and price competition effects imply that the number of entrants (and hence product variety) may actually be smaller in larger markets. In the stochastic dynamic extension of the model, we show that the churning rate of entrepreneurs is higher in larger markets.
منابع مشابه
-
The development and evolution of any system–person, organization–nation depends on how the system succeeds to bridge the gap between what the system knows and what the system does (with the knowledge). We call this the gap between knowing and doing or the knowing-doing gap. If the system does not do what it knows, it will lose out in competition with other systems, its relative performance in...
متن کاملPre Entry Motives into Entrepreneurship and Post Entry Entrepreneurial Orientation
This paper examines empirically the link between the post-entry strategies of new entrepreneurs and the duration of the firm. We use a sample of French entrepreneurs that have set up or taken over a firm during the first six months of 1994. For firms that are still alive at least four years later we have information both on the individual pre-entry motives of the entrepreneurs and on the post e...
متن کامل""Success Taxes/' Entrepreneurial Entry, and Innovation
Interest in the role of entrepreneurial entry in innovation raises the question about the extent to which tax policy encourages or discourages entry. We find that, while the level of the marginal tax rate has a negative effect on entrepreneurial entry, the progressivity of the tax also discourages entrepreneurship, and signiiicantly so for some groups of households. These effects are traceable ...
متن کاملA Real Options Model of Stepwise Entry into Self-employment
This paper tests a real options model of stepwise entrepreneurial entry. We distinguish between part time and full time entry among the self employed in Swedish knowledge intensive industries. Two multinomial logit models tests the entry from employment to partor full time entry in 1998, and to subsequent full time entry in 1999. The empirical evidence indicates the need to distinguish between ...
متن کاملLook Before You Leap: Market Opportunity Identification in Emerging Technology Firms
Entrepreneurs play an elemental role in bringing new technologies to market. As technologies are often configurable to serve customers in a variety of different markets, entrepreneurs can identify multiple market opportunities prior to the first market entry of their emerging firms, and may thus have a choice of which market to enter first. The empirical results presented in this paper offer tw...
متن کامل