The nonlinear Polya process of entrepreneurial agglomeration

Abstract

The geographically converged entrepreneurship, or the entrepreneurial agglomeration has been widely researched in recent years. As for the formation mechanism, traditional researches emphasize regional “economic advantage” and “social advantage” in the enhancing of agglomeration, ignoring the effects of new agent’s entrepreneurial decision and existing regional characteristics. In order to explore the dynamics of entrepreneurial agglomeration formation, this paper focuses on factors that affect individual decisions such as regional initial entrepreneurial ratio, new agent’s risk compensation characteristics and regional economic characteristics. Firstly, this paper constructs the entrepreneurship decision model based on new agents choice preference; then, from the dynamic perspective, a non-linear Polya process that reflects the formation of entrepreneurial agglomeration is constructed. According to Polya process, the ratio of entrepreneur population among whole population in a given region will probably converge to a stable point if new entrants make continuous entrepreneurial decisions. Entrepreneurial agglomeration can be explained in light with the existence and the converging speed of this point. Finally, a numerical simulation is conducted to testify the entrepreneurial agglomeration formation process.