All entrepreneurial productivity increases are not created equal

Authors

Arup Bose, Indian Statistical Institute, Kolkata
Debashis Pal, University of Cincinnati
David E.M. Sappington, University of Florida

Article Type

Research Article

Publication Title

Southern Economic Journal

Abstract

We examine the impact of productivity increases in a setting where wealth-constrained entrepreneurs are privately informed about whether their project will succeed with high (pH) or low (pL) probability. Not surprisingly, many productivity increases (e.g., an increase in pH) generate gains for entrepreneurs and/or venture capitalists. However, some productivity increases (e.g., an increase in pL) can generate widespread losses. Furthermore, entrepreneurs with lowproductivity projects can benefit more from policies that increase the productivity of highquality projects than from policies that increase their own productivity. Therefore, the design of policy to enhance welfare in the entrepreneurial sector can entail important subtleties.

First Page

952

Last Page

974

DOI

10.1002/soej.12032

Publication Date

1-1-2016

Comments

Open Access; Green Open Access

Recommended Citation

Bose, Arup; Pal, Debashis; and Sappington, David E.M., "All entrepreneurial productivity increases are not created equal" (2016). Journal Articles. 4088.
https://digitalcommons.isical.ac.in/journal-articles/4088