A simulation study of entrepreneurial rents

What is it about?

This study creates a computer simulation of a simple economy to test the effect of different entrepreneurial capabilities on performance. These capabilities include creating new value and discovering and exploiting existing value. We find that these capabilities are mostly complementary but the returns to each depends on not just the capabilities of the entrepreneur, but the structure of the market and the capabilities of others.

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Why is it important?

This study develops a computational model of the economy in a way that closely follows Austrian market process theory. The model of the economy adds dynamism to the type of model used in neoclassical economics, but still uses formal tools (cooperative game theory) to clarify the logic.