A patent is a legal monopoly bestowed by the government to an inventor of a new...
A patent is a legal monopoly bestowed by the government to an inventor of a new good or process. Given that we know monopolies create inefficiency in a market, why do we create them through patents?
Homework Answers
The reason is that prolonged profit in the long run encourage firms to take necessary get huge initial investment required in research and development. if there is no patent there is no guarantee of monopoly power and there is no guarantee of long run profits. In that sense, no firm will then take the risk of investing in projects that require huge initial investment and uncertain economic profits in the long run. For goods such as pharmaceutical drugs, automation and advancement in technology, Monopoly power is required in order to have sustained profits and this is ensured by patent.
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A patent is a legal monopoly bestowed by the government
to an inventor of a new...
Discuss the following: "One of the most ridiculous government enterprises is the Patent Office. I...
Discuss the following: "One of the most ridiculous government enterprises is the Patent Office. It permits inventors of new processes and products to create monopolies and to reduce competition, when we know very well that monopolies and reduced competition reduce output raise prices and in other ways gouge the public."
Discuss the following: "One of the most ridiculous government enterprises is the Patent Office. It permits inventors of new processes and products to create monopolies and to reduce competition, when...
1. The monopoly market structure Aa Aa A monopoly, unlike a perfectly competitive firm, assumes s...
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Discuss the following: "One of the most ridiculous government enterprises is the Patent Office. It permits inventors of new processes and products to create monopolies and to reduce competition, when we know very well that monopolies and reduced competition reduce output raise prices and in other ways gouge the public."
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1. The monopoly market structure Aa Aa A monopoly, unlike a perfectly competitive firm, assumes some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that particular industry. Consider the market for computer technology. Patents are granted to inventors of a product or process for a certain number of...
A monopoly like a perfectly competitive firm has some market power. Thus, it can raise its price, within limits, without quantity demanded falling tower. The main way monopolies retain their market power is through barriers to entry, which prevent other companies from entering monopolized markets and competing for customers. Consider the market for a statewide lottery. The government has licensed itself as the only entity allowed to sell tickets for this lottery. It is impossibl for any private firm to...
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