1. The late economic historian Peter Schumpeter considered perfect competition to be "inferior" to monopoly. Why was this? Why might monopolies spend more on research and development.

2. On the other hand, the economist Ken Arrow suggested that monopolies have less incentive to innovate. Summarize his "replacement effect" argument.

3. These authors explain that previous economic theory had failed to provide an unambiguous relationship between competition and innovation. They claim that previous economic models were based on a "flawed" assumption. What was this assumption?

4. According to these authors, why don't monopolies innovate as much as competitive firms?

5. Give an example of a "switchover disruption" that a particular firm might face. You might want to describe a disruption your current employer might go through in the near future, or went through in the past.