Entrepreneur as the Driving Force of Market

In neoclassical equilibrium models, entrepreneur cannot contribute to making decision. Because in neoclassical theories, rational people make decisions, information and markets are perfect and balanced, and no mistake is made by anyone. In their view, entrepreneur is another factor of production, entrepreneur’s reward is paid based on estimation of cost and benefit. Entrepreneur's profit is only paid based on his risk-taking. However, in reality, the information is not complete, nor is market in equilibrium. The alert and clever entrepreneur tries to receive the signals of lucrative opportunities by seeking out the scattered knowledge and information along with non-equilibrium market prices. Thus, entrepreneurs by using practical information known to him, undertake cost and benefit appraisal of projects and evaluate market and take a decision. In this way, entrepreneurs play a significant role in production and exchange and act as the driving forces of market.