355and effectively use new know-how and products (Bhidé, 2008). In addition, a sophisticated, active demand is a sine qua non for industrial success (Porter, 1990), which likely explains why modern markets for industrial goods and services are typified by open-ended relational contracts and long-term demand–supply relationships between business partners who know each other (Kasper et al., 2014). Thus, small and large consumers matter, and their opportunities to act competently are severely curtailed when a certain service or good can only be offered by a government-commissioned provider who typically has a limited scope for acting N. Elert and M. Henrekson

356entrepreneurially by offering and charging for additional services on top of what is granted through the tax-financed system, impeding the back-and-forth bargaining that characterizes evolving market relationships.

Thus, while mission-oriented innovation projects can be justified because problems are urgent, it is important to be aware of the potentially adverse implications for the long-term generation of innovations in such markets caused by the hampering of a crucial (and far from passive) actor. Something similar occurs when the state offers government grants to stimulate entrepreneurship (as discussed in Sect. 4.1), stripping consumers of their role as final arbiters, instead giving it to a bureaucrat or government agency who may or may not have preferences reflecting those of consumers. From a strict efficiency perspective, this seems unsound—but from other perspectives? The whole point of a mission-oriented project may be that the bureaucrat should have different preferences, promoting things that cannot survive on a private market but are deemed valuable in some other sense (say, solar energy to combat climate change). Again, many real-world puzzles can only be judged according to some aesthetic standard (Klein, 2012), over which reasonable people can disagree.