An agent-based model of entrepreneurship Examining the role of alertness and transaction costs

Authored by Graham D Newell, Matthew J Holian

Date Published: 2017

DOI: 10.1108/jepp-01-2015-0003

Sponsors: No sponsors listed

Platforms: NetLogo

Model Documentation: Other Narrative Pseudocode Mathematical description

Model Code URLs: https://drive.google.com/open?id=0B09rOsD6B8myblhQSjdsUVZiM3M

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.
Tags
Economic theory knowledge discovery research methods Entrepreneurial action Market process