FORMAL ENTREPRENEURSHIP THEORY IN ECONOMICS - EXISTENCE AND BOUNDS

Theoretical analysis often can penetrate difficult economic problems in circumstances where common sense is an unreliable guide to decision making. This paper provides some new theoretical problems related to entrepreneurial decisions and behavior. For example, it investigates the optimal timing of the introduction of an innovation. Typically, in practice, innovation is a continuous process. The longer the delay in the transfer of a new product from the R&D facilities to manufacturing and marketing, the more the product is likely to be improved. But that delay also gives competitors an enhanced opportunity to get there first. This paper shows how this trade-off can be analyzed systematically, and yields some surprising results about the optimal decision on the timing of the introduction of the new product.