The Dynamic Model of Birth and Death of Enterprises

The aim of this article is to define the model describing the dynamics of bankruptcy and foundation of new enterprises. In the first part we try to answer what bankruptcy in law, economic and social sense is. It results from the overview of literature that bankruptcy is as natural as growth, and both of these contradictions are complementary. Moreover, an important inference is the need for improving the bankruptcy mechanism, because the more efficient it is, the healthier market surrounds us. On the basis of bankruptcy new firms emerge. We derived a procedure in order to forecast the number of new firms. The conclusion is that dynamic mathematical models may be a useful tool of prediction of a number of new firms founded.