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The discussion in the text presumed a particular form of patent policy, which provided ex post monopoly power to the innovator. An alternative intellectual property rights policy is licensing: firms that have made an innovation can license the rights to use this innovation to others. This exercise asks you to work through the implications of this type of licensing. Throughout, think of the licensing stage as follows: the innovator can make a take-it-or-leave-it-offer to one or many firms so that they can buy the rights to use the innovation (and produce as many units of the output as they like) in return for some licensing fee ν. Consider a competitive environment, and show that if firm 1 is allowed to license its innovation to others, this can never raise its profits and can never increase its incentives to undertake the innovation. Provide an intuition for this result. Now modify the model, so that each firm has a strictly convex and increasing cost of producing, ψ1(q), and also has to pay a fixed cost of ψ0 > 0 to be active (so that the average costs take the familiar inverted U shape). Show that licensing can be beneficial for firm 1 in this case and therefore increase innovation incentives. Explain why the results differ between the two cases.
What general conclusion can be reached with respect to the utility and acceptance of the H-O model?
the elasticity of demand on the part of animal owners is -2.0. The research also estimates that at this price the elasticity of demand for human use would be -.2. The current price is $5.00 per dose. If the MC of production is $1, what should the ..
How do you find AP, MP, TVC, TFC, TC, AVC, AFC, and ATC if the problem gives you a list of # of people doing the labor, quantity produced, fixed costs, and wage rate for example, wage rate is $100 a day, firm has $200 in fixed costs.
a) What would happen to the quantity demanded of cigarettes if income increases b) Are cigarettes a "normal" or "inferior" good c) What would happen to the quantity demanded if household income were to rise by 1% next year
Cameron is an investor trying to decide among the following three different investment options. Option A: Price today: $1000 One year from today Cameron will receive one of the following payments: $1,250 with a probability of 90% $1,000 with a pro..
Heat Tamers, Inc., of Bend, Oregon produces special heat-resistant boots used primarily by firefighters, smoke-jumpers and steelworkers. It is contemplating an expansion into the heat resistant leather market charging a price of $150 per pair of b..
The following data represent the daily demand (y in thousands of units) and the unit price (x in dollars) for a product. a. Compute and interpret the sample covariance for the above data. b. Compute and interpret the sample correlation coefficient.
Discuss the issues arising from the disruption of technological change on the perceptions of those in the work force.
Based on your answer to this question, should government regulatory activities designed to reduce the scope of lemons problems take the form of economic regulation or social regulation? Take a stand, and support your reasoning.
What are some other characteristics of this market structure
According to Summers what is the most important event over the past 25 years in the global economy Does he see the success of China and the other emerging economies as a threat to the US Why or why not
If the countries split the market evenly, what would be SouthAfrica's production and profit What would happen to South Africa's profitif it increased its production by 1,000 while Russia sticks to the cartelagreement
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