Entrepreneurship and Growth - An Overlapping Generations Approach -

Arbeitspapier

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 occupations: either firm-ownership in the intermediate goods sector, characterized by monopolistic competition, or employment as a worker in this sector. The occupational choice under risk endogenizes the number 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 monopolists 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Diskussionsbeitrag ; No. 304

Classification and Topics

• Classification: Wirtschaft
• Subject: OLG ; occupational choice ; monopolistic competition ; growth

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Clemens, Christiane
• Event: Veröffentlichung
• (who): Universität Hannover, Wirtschaftswissenschaftliche Fakultät
• (where): Hannover
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/22416
• Last update: 10.03.2025, 11:45 AM CET