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January 29, 2010 | History

Business start-ups and productive efficiency 1 edition

Business start-ups and productive efficiency
Hakki Yazici

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Business start-ups and productive efficiency
Hakki Yazici.

Published 2008 by Federal Reserve Bank of Minneapolis, Research Dept. in [Minneapolis, MN] .
Written in English.

About the Book

This paper studies efficient allocation of resources in an economy in which agents are initially heterogeneous with regard to their wealth levels and whether they have ideas or not. An agent with an idea can start a business that generates random returns. Agents have private information about (1) their initial types, (2) how they allocate their resources, and (3) the realized returns. The unobservability of returns creates a novel motive for subsidizing agents who have ideas but lack resources to invest in them. To analyze this motive in isolation, the paper assumes that agents are risk-neutral and abstracts away from equality and insurance considerations. The unobservability of initial types and actions implies that the subsidy that poor agents with ideas receive is limited by incentive compatibility: the society should provide other agents with enough incentives so that they do not claim to be poor and have ideas. The paper then provides an implementation of the constrained-efficient allocation in an incomplete markets setup that is similar to the U.S. Small Business Administration's Business Loan Program. Finally, the paper extends the model in several dimensions to show that the results are robust to these generalizations of the model.

Edition Notes

Title from PDF file (viewed on Oct. 10, 2008).

"September 2008."

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.

Series
Working paper / Federal Reserve Bank of Minneapolis, Research Dept -- 665

Classifications

Library of Congress
HB1

The Physical Object

Format
Electronic resource

ID Numbers

Open Library
OL22649171M
LC Control Number
2008613018

History

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January 29, 2010 Edited by WorkBot add more information to works
December 11, 2009 Created by WorkBot add works page