We reward innovation with patents, which confer temporary monopoly status. Michael who is well known for his
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We reward innovation with patents, which confer temporary monopoly status. Michael who is well known for his work on developing alternative systems. You can read some of his work here:https://scholar.harvard.edu/files/kremer/files/incentivizing_innovation_ipe_pub_2010.pdf
Or some more complicated work here:
https://dash.harvard.edu/bitstream/handle/1/3693705/Kremer_PatentBuyouts.pdf
- Draw a diagram (showing MC, AVC, MR, and Demand curves) to show why a monopoly creates deadweight loss.
- Explain, in a few sentences, why we award patents despite this deadweight loss. What problem do patents solve?
- Describe an alternative to awarding patents considered by Kremer. What problems does it solve? What risks does it create?
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