Ali Zarifhonarvar,; Mehdi Feizi,; , Mohammad Taher Ahmadi Shadmehri
Abstract
According to different economists such as Baumol and Acemoglu, entrepreneurship may manifest itself in a community productively and non-productively. Rewards structure and wealth distributions are effective factors in investment decisions and economic growth. All economies worldwide are suffering from ...
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According to different economists such as Baumol and Acemoglu, entrepreneurship may manifest itself in a community productively and non-productively. Rewards structure and wealth distributions are effective factors in investment decisions and economic growth. All economies worldwide are suffering from a degree of corruption, which enables rent-seekers to take possession of a part of entrepreneurs’ shares and it could be a sign of violation of property rights. This research presents a theoretical model for the relationship of investment decisions with rent-seekers probability and bribe rate; it is shown that economies may be placed in a multiple equilibria state with low and high rentier rates. The study also found that both the entrepreneurial investment level and income, and rent-seekers income (share), are negatively correlated with the likelihood of an entrepreneur encountering a rent-seeker. In fact, rent-seeking as a symbol of violation of property rights not only decreases the investment level, but also has a negative effect on the rent-seekers payoff. An extended model shows that considering the open economy and the possibility of immigration, it becomes clear that high bribe rates increase the immigration motivation, and greater difference in the rentier rates of the two countries raises the immigration likelihood.
