Heterogeneous Capital, Entrepreneurship, and Economic Organization

Abstract

We outline an Austrian approach to economic organization based on the entrepreneur and the Austrian idea of capital as heterogeneous and time-dimensioned, two themes associated with Israel Kirzner's contributions. We provide a novel interpretation of capital heterogeneity based on the notion of attributes, argue that attributes are costly to measure and that this links directly to the theory of economic organization. In particular, we develop insights in economic organization based on the notion that entrepreneurs will often have to experiment with capital assets to gauge the value of these assets when deployed in production.