A gain from trade: From unproductive to productive entrepreneurship

There is a large and growing theoretical literature studying the allocation of individuals and their effort amongst productive and unproductive entrep reneurial activities. Trade and competition between regions have been recog nized as potentially powerful forces limiting unproductive entrepreneurial activities. In this paper we extend the technology-ladder model of Grossman and Helpman to study this issue and demonstrate conditions under which low ering of tariffs leads to a shift from unproductive to productive entrepren eurial activities. (C) 2001 Elsevier Science B.V. All rights reserved.