Regional concentration of entrepreneurial activities

• Regions involved in a market entry game may display entrepreneurial agglomerations.
• This necessitates economic interactions between the individuals in different regions.
• Success-biased choices of occupation and location favor entrepreneurial clusters.
• Exogenous migration acts against entrepreneurial agglomerations.
• Agglomerations enhance the performance of clusters and that of the whole economy.

Entrepreneurial agglomerations often feature positive feedback mechanisms such as strategic complementarities, knowledge spillovers and network externalities. However, they can also occur in the absence of these mechanisms, even across regions of considerably homogeneous economic potential. We analyze a market entry game in an evolutionary setup to investigate how two economically similar regions may evolve different rates of entrepreneurship under the assumption that there is migration between them, and that individuals are predisposed to imitate others who are economically more successful. We examine the long run dynamics of this model and assess the impact of the economic, social and demographic exchange on the regional concentration of entrepreneurial activities.