Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/76273 
Year of Publication: 
2003
Series/Report no.: 
CESifo Working Paper No. 877
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper surveys the various forms of market failure that can arise when innovating entrepreneurs consider entering an industry, and outlines possible implications for public policy. Externalities can arise from entrepreneurial activities such as spillover benefits from new innovations and spillover costs on incumbent firms. New entrepreneurs can also face various barriers to entry, either natural ones or those created by incumbent firms or government policy. They may also face problems in obtaining credit at efficient terms if there are information asymmetries in markets for either loan or equity finance. Finally, asymmetric information may also plague new firms in the hiring of workers. These various inefficiencies are of contradictory sign, some calling for an incentive to startup firms and other for the opposite. Thus, public policy is ambiguous and depends on the circumstances at hand.
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.