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Fifteen million ZZ894 microprocessors are produced annually. The unit production cost is $100. Aggressive competition between the four main producers implies an equilibrium price very

Fifteen million ZZ894 microprocessors are produced annually. The unit production cost is $100. Aggressive competition between the four main producers implies an equilibrium price very close to marginal cost. An independent laboratory in Northern California has recently discovered and patented a novel production process that will slash production costs by 50%. How much would you be willing to pay for the patent if you were granted exclusivity? What if exclusivity were not guaranteed?

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