The lack of a strong local entrepreneurial activity and the presence of a flourishing rent-seeking sector are two of the major issues raised when debating on developing and transition countries. We claim that the allocation of entrepreneurs between productive and rent-seeking sectors is mainly determined by the reward structure that prevails in both sectors. The introduction of a rent-seeking spillover factor permits to demonstrate that the entrepreneurs involved in production activities may find it convenient to switch to unproductive ones, when the production method operates under decreasing returns.
ENTREPRENEURSHIP, RENT-SEEKING SPILLOVERS AND DECREASING RETURNS: A MICROECONOMIC APPROACH
INFANTE, Davide;SMIRNOVA, JANNA
2009-01-01
Abstract
The lack of a strong local entrepreneurial activity and the presence of a flourishing rent-seeking sector are two of the major issues raised when debating on developing and transition countries. We claim that the allocation of entrepreneurs between productive and rent-seeking sectors is mainly determined by the reward structure that prevails in both sectors. The introduction of a rent-seeking spillover factor permits to demonstrate that the entrepreneurs involved in production activities may find it convenient to switch to unproductive ones, when the production method operates under decreasing returns.File in questo prodotto:
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