Explain what protections and rules are in place for entrepreneurs, which encourages them to innovate

The U.S. was among the first to create such legal institutions as private property rights, and an inexpensive patent system. In addition, the fact that contracts are enforceable by the courts, and that one may file for bankruptcy give options to entrepreneurs to take the risk of innovation, and to moderate the effects of failure in the event they are unsuccessful. In Europe, historically, the king could expropriate private property at his pleasure, and the patent system, when it was formed, was quite expensive, and subject to the whim of the king. In the U.S., all of these rules and systems also ensured entrepreneurs and innovators that they could keep more of the wealth generated by their efforts. Their success encouraged others to also innovate, and so the U.S. economy grew exponentially because of their efforts