<p>The current literature highlights the role of institutions in affecting the allocation of entrepreneurial talent as a precondition for productive entrepreneurship. However, existing approaches to this issue remain fragmented. This conceptual article bridges this gap by creating the price-theoretic framework that integrates insights from research on formal and informal institutions, the allocation of entrepreneurial talent, and the entrepreneurial ecosystem perspective. Based on the existing findings, we illustrate how shifts in institutional settings affect productive entrepreneurship. The proposed model shows that the same formal institutions, such as strong property rights, can lead to different outcomes in the allocation of entrepreneurial talent depending on the prevailing informal institutions, such as cultural attitudes toward entrepreneurship or levels of corruption. Given its simplicity, the proposed model serves as a visual learning tool supporting entrepreneurship education and offering policymakers a framework to follow up on the effects of institutional reforms.</p>