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Suppose a firm is considering investing in research that would lead to a cost-saving innovation. Assuming the firm can retain this innovation solely for its

Suppose a firm is considering investing in research that would lead to a cost-saving innovation. Assuming the firm can retain this innovation solely for its own use, will the additional profits from the lower (marginal) costs be greater if the firm is a competitive price taker or if the firm is a monopolist? Develop a careful graphical argument. More generally, develop a verbal analysis to suggest whether competitive or monopoly firms are more likely to adopt cost-saving innovations. )

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