An Economic Model of Strategic Entrepreneurship

How do new entrants create and capture value in established industries? Starting from the foundations of neoclassical economics we model entrepreneurial entry and competition as occurring simultaneously in production technology space and product attribute space. Our model's central feature is to dis-aggregate entrepreneurial rents into four components: arbitrage, innovation, organization, and uncertainty-bearing. This permits us to model the nature of value creation from a common analytical platform, and to measure value capture as a set of distinct rent streams available to multiple stakeholders over time