What determines entrepreneurial clusters ? ∗

@inproceedings{Guiso2006WhatDE,
  title={What determines entrepreneurial clusters ? ∗},
  author={Luigi Guiso},
  year={2006}
}
We contrast two potential explanations of the substantial differences in entrepreneurial activity observed across geographical areas: entry costs and external effects. We extend the Lucas model of entrepreneurship to allow for heterogeneous entry costs and for externalities that shift the distribution of entrepreneurial talents. We show that these assumptions have opposite predictions on the relation between entrepreneurial activity and firm level TFP: with different entry costs, in areas with… CONTINUE READING
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