Freedom, Barriers to Entry, Entrepreneurship, and Economic Progress

31 Pages Posted: 19 Mar 2016

See all articles by J. R. Clark

J. R. Clark

The University of Tennessee at Chattanooga

Dwight Lee

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Russell S. Sobel

The Citadel - School of Business

Date Written: 2007

Abstract

While entrepreneurs benefit from unrestricted free entry into markets, they have a time-inconsistent incentive to lobby for government entry restrictions once they become successful. Bad political institutions yield to these demands, and growing barriers are placed on domestic and international competition. Good institutions do not, and this effort is instead channeled toward further wealth creation. We find that productive entrepreneurship depends on both the freedom to succeed and discipline of failure that free markets provide. Trade barriers result in fewer combinations of goods and inputs attempted, and less productive entrepreneurial resource use. We also provide evidence on the value of business failure.

Keywords: Entrepreneurship, Creative destruction, Economic freedom, Barriers to entry

JEL Classification: H11, L26, F13

Suggested Citation

Clark, Jeff R. and Lee, Dwight and Sobel, Russell S., Freedom, Barriers to Entry, Entrepreneurship, and Economic Progress (2007). Review of Austrian Economics, Vol. 20, No. 4, 2007. Available at SSRN: https://ssrn.com/abstract=2587364

Jeff R. Clark (Contact Author)

The University of Tennessee at Chattanooga ( email )

Department of Economics
Suite 313 Fletcher Hall
Chattanooga, TN 37403-2598
United States

Dwight Lee

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602-6254
United States

Russell S. Sobel

The Citadel - School of Business ( email )

171 Moultrie St.
Charleston, SC 29409
United States

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