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Impacts on the Support to Start-up Venture Company using Public Purchases  

Kim, Jaehyun (Phi Institute)
Kim, Ji Young (Dept. of Business Administration, Sahmyook University)
Publication Information
Asia-Pacific Journal of Business Venturing and Entrepreneurship / v.16, no.2, 2021 , pp. 153-161 More about this Journal
Abstract
This study analyzed the ripple effect of the demand-side support for start-up venture companies on the macro economy using Dynamic General Equilibrium model. In the model, start-up venture companies were expressed in a manner that distinguished between workers and entrepreneurs by applying the span of control in the Lucas(1978). As a result of the analysis, when the share of public procurement of start-up venture companies was increased from 5.7% to 10%, the actual production of start-up venture companies increased by about 46.17% and the number of venture companies increased by about 150%. In addition, it was analyzed that the number of jobs through venture companies increased by about 61.56%. In addition, it was found that the economic effect was greatly reduced when the start-up venture company was supported as a subsidy for the supply sector with the same amount as the public procurement support. This is interpreted as the fact that if the government implements the supply-side support policy, the expansion of supply causes the price of start-up venture companies to fall, reducing the effect of the support policy in half. Therefore, when supporting start-up venture companies, the government should make efforts to maximize the policy effect by expanding the demand-side support through public procurement and reducing the payment of simple subsidies to start-up venture companies.
Keywords
Start-up; Venture Company; Economic Effects; Support using Public Purchase; Dynamic General Equilibrium; Span of Control;
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