An agent-based model of entrepreneurship: Examining the role of alertness and transaction costs
Journal of Entrepreneurship and Public Policy
ISSN: 2045-2101
Article publication date: 21 August 2017
Abstract
Purpose
The purpose of this paper is to develop an agent-based model that highlights the role of entrepreneurship in the market process.
Design/methodology/approach
The authors explore the effect of entrepreneurial alertness and transaction costs on two normative standards: the speed of price equilibration and the level of product diversity.
Findings
Both higher alertness and lower transaction costs lead to faster equilibration, as expected. High alertness contributes to high product diversity, also as expected. However, and counter-intuitively, lower transaction costs actually leads to lower levels of product diversity, as markets equilibrate before entrepreneurs can discover many new products.
Originality/value
The analysis provides new insight into entrepreneurship theory and policy.
Keywords
Acknowledgements
The second author gratefully acknowledges support from an SJSU Economics Department research grant. The authors thank Robert Ragan, participants at APEE (Nassau) and three anonymous reviewers for valuable comments. All errors remain of the authors.
Citation
Newell, G.D. and Holian, M.J. (2017), "An agent-based model of entrepreneurship: Examining the role of alertness and transaction costs", Journal of Entrepreneurship and Public Policy, Vol. 6 No. 2, pp. 259-270. https://doi.org/10.1108/JEPP-01-2015-0003
Publisher
:Emerald Publishing Limited
Copyright © 2017, Emerald Publishing Limited