Dynamic efficiency and path dependencies in venture capital markets

"This book offers a new explanation why venture capital investments differ substantially between countries. Recent literature has attributed these differences to differences in the financial architecture and tax regulations. By contrast, this book shows by using simulations of a general equilibrium model that interactions between venture capitalists' reputation building and experience accumulation lead to different levels of venture capital investments. The interactions taking place in venture capital markets can result in inefficiencies in experience accumulation. The book argues that government subsidies in such a situation may increase venture capitalists' experience accumulation. However, using an agency model, the book shows that subsidies can have negative effects since they reduce venture capitalists' incentives to support the management teams."--BOOK JACKET.