Entry and Schumpeterian Profits: How Technological Complexity Affects Industry Evolution

42 Pages Posted: 18 Jul 2009 Last revised: 5 May 2013

Philip E. Auerswald

George Mason University - Schar School of Government and Policy

Date Written: July 18, 2009

Abstract

A large empirical literature has documented differences in Schumpeterian profits, both among firms in single industries and between firms in different industries. Theorists have proposed various institutional and strategic factors to account for such differences but have had relatively little to say about the manner in which technology affects entry and profits. In this paper I present a model in which persistent intraindustry differences in firm profitability arise as the outcomes of learning and imitation, and interindustry differences in the persistence of above normal profits arise solely from production being more technologically complex in some industries than in others.

Suggested Citation

Auerswald, Philip E., Entry and Schumpeterian Profits: How Technological Complexity Affects Industry Evolution (July 18, 2009). Journal of Evolutionary Economics, Forthcoming; GMU School of Public Policy Research Paper No. 2010-11. Available at SSRN: https://ssrn.com/abstract=1435821

Philip Edgar Auerswald (Contact Author)

George Mason University - Schar School of Government and Policy ( email )

3351 Fairfax Dr.
Arlington, VA 22201
United States

HOME PAGE: http://auerswald.org

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