We develop a theory of innovation for entry and sale into oligopoly, and show that inventions of higher quality are more likely to be sold (or licensed) to an incumbent due to strategic product market effects on the sales price. Such preemptive acquisitions by incumbents are shown to stimulate...

We incorporate the concept of social identity into a stylized model of occupational choice and analyze whether an individual’s identity affects his or her decision to become an entrepreneur. We argue that an entrepreneurial identity results from an individual’s socialization. This could be...

Demographic change will be one of the major challenges for economic policy in the developed world in the next decades. In this article, we analyze the relationship between age structure and the number of startups. We argue that an individual’s decision to start a business is determined by his...

New firm location decisions, relative to incumbents may be based on a choice between two types of advantages: natural advantages or those that arise from social embeddedness, the latter of which may particularly include knowledge spillovers. We analyze the relative importance of geographically...

Using the framework provided by the asymmetric-information and real-options theories, we examine the impact of uncertainty on firms’ decisions and market outcomes. We construct alternative measures of uncertainty based on survey of professional forecasters and our estimation of...

In this paper, we study entrepreneurial innovations in an industry characterized by network effects. We show that the presence of network externalities tends to make the entrepreneur prefer sale to entry. Moreover, we also show that the incentive to innovate for entry decreases when network...

We examine the impact of uncertainty on employment dynamics. Alternative measures of uncertainty are constructed based on the survey of professional forecasters, and regression-based forecasting models for GDP growth, inflation, S&P500 stock price index, and fuel prices. Our results indicate...