Principles of Microeconomics / Unit 12 MIC 1104 short lesson, about 20 seconds
Why Competition Can Discourage Innovation
Captions available
The idea
An innovator bears the research cost and risk. If rivals can copy quickly, the edge is small and brief, and studies put the inventor's share of the gain at a third to a half. The rest spills over.
In practice
The laser's inventor won his patent after a twenty-year fight.
Where people slip
The spillover is the externality, and the shortfall it causes is underinvestment.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
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