Girish Mahajan

Schumpeterian rent

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Schumpeterian rents are earned by innovators and occur during the period of time between the introduction of an innovation and its successful diffusion. It is expected that successful innovations, in time, will be imitated, but until that occurs, the innovator will earn Schumpeterian rents. They were named after economist Joseph Schumpeter, who saw profits made by businesses as resulting from the development of new processes which disturb economic equilibrium, temporarily raising revenues above their resource costs. This type of profit is also called entrepreneurial rent.

Schumpeterian rent is seen as a form of economic rent, although Schumpeterian rent may be seen as an incentive towards greater economic inefficiency.

References

Schumpeterian rent Wikipedia


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