Entrepreneurship and the economic theory of markets

Casson, M. (2025) Entrepreneurship and the economic theory of markets. Foundations and Trends in Entrepreneurship, 21 (2). pp. 88-171. ISSN 1551-3122 doi: 10.1561/0300000134

Abstract/Summary

Entrepreneurship studies has an uneasy relationship with mainstream economics. This paper attempts to bridge the gap by presenting a formal mathematical theory of entrepreneurship, focusing in competing entrepreneurs operating in a segmented market. The entrepreneur is modelled as an innovative market-maker, discovering opportunities for trade, Each market segment is characterised by a maximum price that customers are willing to pay, and a quantity that they are willing to buy at that maximum price. The model can solve for the outcome of complicated market structures using a simple technique, namely linear programming. A remarkable feature of the model is that it re-ignites historic debates in mainstream economic theory that have never been fully resolved, and are largely ignored in contemporary economic literature. It shows that markets normally have two prices-not one– namely a wholesale price and a retail price-and that, owing to segmentation, prices are not normally uniform but dispersed. The mathematical model is sufficiently simple that it does not require calculus, and the method of solution is so straightforward that the requisite techniques can be freely accessed on a laptop.

Item Type	Article
URI	https://centaur.reading.ac.uk/id/eprint/120453
Identification Number/DOI	10.1561/0300000134
Refereed	Yes
Divisions	Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
Publisher	Now
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