The brewer, the baker, and the monopoly maker

The brewer, the baker, and the monopoly maker Purpose – This paper seeks to examine how productive entrepreneurial activities, such as innovation, influence unproductive entrepreneurial activities, such as regulatory rent seeking. Design/methodology/approach – To investigate the argument the authors consider Bavaria's brewing industry in the fourteenth through sixteenth centuries using an analytic narrative approach. Findings – The example of Bavaria's brewing industry suggests that productive entrepreneurial activities may increase unproductive entrepreneurial activities. Confronted with a situation in which innovation erodes their monopoly returns, legally protected producers and policymakers reregulate industry to recapture lost rents. Regulation policy under such reregulation tends to be more encompassing, and thus produces more unproductive entrepreneurial activity, than pre‐innovation regulation policy. This reflects the greater number or variety of producers that new regulation policy must encompass for reregulation to recreate rents. Originality/value – The paper builds on Thomas’ work, which suggests that innovation can undermine existing regulatory institutions and result in deregulation. This paper identifies an alternative channel through which productive entrepreneurial innovation may influence unproductive entrepreneurial rent seeking. It argues that productive entrepreneurial innovation by legally unprotected producers in an industry can also increase, rather than decrease, the extent of unproductive entrepreneurship in that industry. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Entrepreneurship and Public Policy Emerald Publishing

The brewer, the baker, and the monopoly maker

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Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
2045-2101
DOI
10.1108/20452101211208371
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper seeks to examine how productive entrepreneurial activities, such as innovation, influence unproductive entrepreneurial activities, such as regulatory rent seeking. Design/methodology/approach – To investigate the argument the authors consider Bavaria's brewing industry in the fourteenth through sixteenth centuries using an analytic narrative approach. Findings – The example of Bavaria's brewing industry suggests that productive entrepreneurial activities may increase unproductive entrepreneurial activities. Confronted with a situation in which innovation erodes their monopoly returns, legally protected producers and policymakers reregulate industry to recapture lost rents. Regulation policy under such reregulation tends to be more encompassing, and thus produces more unproductive entrepreneurial activity, than pre‐innovation regulation policy. This reflects the greater number or variety of producers that new regulation policy must encompass for reregulation to recreate rents. Originality/value – The paper builds on Thomas’ work, which suggests that innovation can undermine existing regulatory institutions and result in deregulation. This paper identifies an alternative channel through which productive entrepreneurial innovation may influence unproductive entrepreneurial rent seeking. It argues that productive entrepreneurial innovation by legally unprotected producers in an industry can also increase, rather than decrease, the extent of unproductive entrepreneurship in that industry.

Journal

Journal of Entrepreneurship and Public PolicyEmerald Publishing

Published: Apr 20, 2012

Keywords: Entrepreneurship; Rent seeking; Regulation; Innovation; Reregulation; Brewing

References

  • Entrepreneurship: productive, unproductive, and destructive
    Baumol, W.J.
  • Regulatory disequilibrium and inefficiency: the case of interstate trucking
    Benson, B.L.
  • The non‐productive entrepreneurial process
    Coyne, C.J.; Sobel, R.S.; Dove, J.A.

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