Determine the best number of firms to sell the secret to

Reference no: EM13187725

A firm in a perfectly competitive market invents a method of production that lowers marginal costs. What happens to output? What happens to the price it charges?

A. The firm has an employee who threatens to tell all other firms in the industry about how to implement this new technique. Will it be possible to bribe this employee not to do this? Explain why or why not.

B. Why should the employee choose to tell only some of the other firms rather than all of them?

C. What factors will determine the best number of firms to sell the secret to?

Reference no: EM13187725

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