Toward a Theory of Entrepreneurial Rents: A Simulation of the Market Process

Strat. Mgmt. J., 2014, DOI: 10.1002/smj.2203

33 Pages Posted: 10 Jan 2014 Last revised: 4 May 2014

See all articles by Mohammad Keyhani

Mohammad Keyhani

University of Calgary - Haskayne School of Business

Moren Levesque

University of Waterloo

Anoop Madhok

York University - Schulich School of Business

Date Written: January 8, 2014

Abstract

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.

Keywords: Entrepreneurship, disequilibrium, rents, Austrian economics, cooperative game theory

JEL Classification: M13, D52, L10

Suggested Citation

Keyhani, Mohammad and Levesque, Moren and Madhok, Anoop, Toward a Theory of Entrepreneurial Rents: A Simulation of the Market Process (January 8, 2014). Strat. Mgmt. J., 2014, DOI: 10.1002/smj.2203. Available at SSRN: https://ssrn.com/abstract=2376581

Mohammad Keyhani (Contact Author)

University of Calgary - Haskayne School of Business ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

Moren Levesque

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

Anoop Madhok

York University - Schulich School of Business ( email )

470 Keele Street
Toronto, ON M3J 1P3
Canada
416-736-2100 x20578 (Phone)

HOME PAGE: http://research.schulich.yorku.ca/faculty-profile-details.jsp?id=87&tab=0

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