Toward a theory of entrepreneurial rents: A simulation of the market process

While strategy theory relies heavily on equilibrium theories of economic rents such as Ricardian and monopoly rents, we do not yet have a comprehensive theory of disequilibrium or entrepreneurial rents. We use cooperative game theory to structure computer simulations of the market process in which a...

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Bibliographic Details
Published in:Strategic management journal 2015-01, Vol.36 (1), p.76-96
Main Authors: Keyhani, Mohammad, Lévesque, Moren, Madhok, Anoop
Format: Article
Language:English
Subjects:
Austrian economics
cooperative game theory
Disequilibrium
Economic rent
Entrepreneurs
Entrepreneurship
entrepreneurship
disequilibrium
rents
Austrian economics
cooperative game theory
Game theory
Monopolies
Rent
rents
Simulation
Structural change
Studies
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Summary:While strategy theory relies heavily on equilibrium theories of economic rents such as Ricardian and monopoly rents, we do not yet have a comprehensive theory of disequilibrium or entrepreneurial rents. We use cooperative game theory to structure computer simulations of the market process in which acts of creation and discovery disequilibrate and equilibrate the market over time. Using simulation experiments, entrepreneurial rents can be isolated from structural rents by keeping initial structural advantages constant. We impute entrepreneurial rents to underlying actions of creation and discovery under various combinations. Our results have relevant implications for entrepreneurship strategy, particularly for firm boundaries and resource allocation decisions.
ISSN:0143-2095
1097-0266
DOI:10.1002/smj.2203