…of individual players in an established industry?
Say the city of Middlesville has a middling amount of tourism, and a middling-sized hotel industry to deal with their accomodation needs - worth about, say, a million dollars a year, counting over the whole industry.
Bob the entrepreneur, looking around at the state of the industry, reckons that the current providers aren’t up to much, and he can do better. So he sets up a couple of hotels. As it happens he’s right - he can do better. His hotels are somewhat nicer and somewhat more efficiently run than the existing ones, and after 5 years he’s wildly successful, and has a market share of about two-thirds of the Middlesville hotel industry. Which is now only worth $900,000, by the way, since his increased efficiency means he can offer somewhat lower prices than his competitors - one reason that he’s been so successful.
What’s Bob’s personal contribution to the economy of Middlesville?
Lots of people would give the simplistic answer of “$600,000 a year” - the amount his own hotels make. But of course, if he didn’t own the hotels that are making that profit, someone else would, as evidenced by the fact that 5 years ago, someone else did. The fact that he, and not someone else, has that income is certainly nice for him, but it’s not all that significant to anyone who’s not Bob or one of his flailing competitors.
On the other hand, it would be unfair to Bob to call the answer “zero”, because he has done useful work in making a slightly superior product available at a slightly cheaper price.
Are there any recognised tools among economists for thinking about this kind of problem?