Who Seeks Quasi-Rents at the Shutdown Point?

Biľo, Šimon

doi:10.2139/ssrn.2808797

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Responding To Entrepreneurial Errors Through Bureaucracies1

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2016

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“…A number of people realize they have made mistakes in the number of workers they hired, investment projects they started, and debt they issued. These mistakes threaten specific human and physical capital incurred in the related projects and corresponding quasi-rents, as Bilo (2016) shows. Owners of these specific production factors-whether they are shareholders or workers-therefore have an incentive to demand that the government "do something."…”

Section: Responding To Entrepreneurial Errors Through Bureaucraciesmentioning

confidence: 99%

Entrepreneurial Errors in a Kaleidic Democracy

Bilo¹

2016

SSRN Journal

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Economic activity is a stream of interconnected experiments, where some are bound to fail. Such failures are costly and policy makers might aspire to mitigate them, particularly during economic crises. The mitigation can happen in two ways: through further entrepreneurial experimentation in the market process or through the political process. When the goal is to minimize uncertainty during economic crises, profit-seeking entrepreneurship should dominate political action. This is because while people easily understand that the goal motivating entrepreneurs is to stay in business and to keep revenues above costs, the goals driving bureaucrats and politicians are less predictable.

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Section: Responding To Entrepreneurial Errors Through Bureaucraciesmentioning

confidence: 99%