Working Paper Series
The Entrepreneurial Rent: The Value of and Compensation for Entrepreneurship
() and Mikael Stenkula
Abstract: The surplus that is created in a successful
entrepreneurial venture is much higher than the profit corresponding to the
risk-adjusted market rate of return. The part of the surplus that exceeds
this level may be enoted “entrepreneurial rent.” Such rents normally
disappear in the long run but so-called isolating mechanisms ensure that
these rents persist in the short or medium run. Entrepreneurial rents arise
when successful entrepreneurship is exercised and entrepreneurial firms
create and successfully commercialize something new and unique. The
presence of and search for entrepreneurial rents is a prerequisite for the
innovations and structural change required to generate economic growth.
High ex post compensation for successful entrepreneurship cannot be taxed
harshly without affecting entrepreneurs’ willingness to supply effort.
Keywords: Entrepreneurship; Economic rent; Entrepreneurial rent; Innovation; Imitation; (follow links to similar papers)
JEL-Codes: D51; J30; L26; O31; (follow links to similar papers)
22 pages, June 16, 2016, Revised March 2, 2017
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- This paper is published as:
Henrekson, Magnus and Mikael Stenkula, (2017), 'The Entrepreneurial Rent: The Value of and Compensation for Entrepreneurship', Journal of Entrepreneurship and Public Policy, Vol. 6, No. 1, pages 11-25
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