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From course:

Industrial Organisation 2022

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Question:

What does Schumpeter's dynamic view of competition say about entrepeneurs?

Author: Hjalmer Pedersen



Answer:

Schumpeter’s dynamic view of competition: • Innovation creates disequilibrium in the market – market power and abnormal profit for the innovator • Other competitors forced to exit or whole industry disappears (creative destruction) • Imitation follows, abnormal profit and market share of innovator declines normal profit and equilibrium will be restored


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