Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 51: ENTREPRENEURSHIP AS RECOMBINANT GROWTH
Ola Olsson () and Bruno S. Frey ()
Additional contact information
Ola Olsson: Department of Economics, School of Economics and Commercial Law, Göteborg University, Postal: Box 640, SE 40530 GÖTEBORG
Bruno S. Frey: Institute for Empirical Economic Research, University of Zürich, Postal: Blümlisalpstrasse 10, CH-8006, Zürich, Switzerland, ,
Abstract: The paper presents a model of the entrepreneur as an undertaker of new combinations of ideas. Technology is seen as a set of ideas in a metric technology space where new knowledge is created by the combination of older ideas in the spirit of Schumpeter (1934), Weitzman (1998) and Olsson (2000). Given some intuitive assumptions, we demonstrate that technological progress generated by the convex combination of ideas is constrained by five factors: First, the combinatory process eventually leads to the exhaustion of technological opportunity. Second, the cost of combining ideas increases with the technological distance between the originating ideas. Third, profits are maximized when ideas are combined that are technologically close. Fourth, the technology set is constrained by a social possibility set of socially acceptable ideas. Five, the boundaries implied by the ruling technological paradigm limits the scope for eternal recombinant growth.
Keywords: recombinant growth; technology; ideas; technology space
20 pages, May 31, 2001
Full text files
gunwpe0051.pdf
- Published as
- Ola Olsson and Bruno S. Frey, (2002), 'Entrepreneurship as Recombinant Growth', Small Business Economics, vol 19, no 2, pages 69-80
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