The brewer, the baker, and the monopoly maker
Journal of Entrepreneurship and Public Policy
ISSN: 2045-2101
Article publication date: 20 April 2012
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.
Keywords
Citation
Thomas, D.W. and Leeson, P.T. (2012), "The brewer, the baker, and the monopoly maker", Journal of Entrepreneurship and Public Policy, Vol. 1 No. 1, pp. 84-95. https://doi.org/10.1108/20452101211208371
Publisher
:Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited