/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Q. 17 Can a company be guaranteed all ... [FREE SOLUTION] | 91影视

91影视

Log out

Learning Materials

Features

Discover

Chapter 13: Q. 17 (page 316)

Can a company be guaranteed all of the social

benefits of a new invention? Why or why not?

Short Answer

Expert verified

A employer cannot be guaranteed all the social benefits of a brand new invention because now not all the high-quality externalities of a brand new product or concept can be internalized. Patent regulation can internalize some of these externalities, but patents finally expire, and other groups/ people might be able to use and enjoy the product or concept.

Step by step solution

01

Concept Introduction

A firm that invests in developing new technology provides significant benefits to those who utilize this technology, but it also provides benefits to those around it.
A common social benefit example is vaccines, if you pay $20 to get a flu shot, by immunizing yourself you are less likely to spread it to others, which benefits them. If all economic externalities were accounted for you would be able to charge them for this protection.

02

Explanation

While patents and other protections can help companies keep the rewards of their innovations, not all of the social benefits can be quantified. This is because externalities and social benefits have massive reach and benefit people to varying degrees. Additionally, the existence of functional technology can indirectly lend inspiration and ideas to competitors, even with a patent.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow HighFlyer Airlines to give passengers more comfort and sell more tickets at a higher price. However, redesigning the cabin means rethinking many other elements of the airplane as well, like engine and luggage placement, and the most efficient shape of the plane for moving through the air. HighFlyer Airlines has developed a list of possible methods to increase cabin space, along with estimates of how these approaches would affect the plane's operating costs and ticket sales. Based on these estimates, Table 13.5 shows the value of R&D projects that provide at least a certain private rate of return. Column 1 = Private Rate of Return. Column 2 = Value of R&D Projects that Return at Least the Private Rate of Return to HighFlyer Airlines. Use the data to answer the following questions.

Private rate of returnValue of R&D
12%\(100
10%\)200
8%\(300
6%\)400
4%$500

a. If the opportunity cost of financial capital for HighFlyer Airlines is 6%, how much should the firm invest in R&D?

b. Assume that the social rate of return for R&D is an additional 2% on top of the private return; that is, an R&D investment that had a 7% private return to HighFlyer Airlines would have a 9% social return. How much investment is socially optimal at the 6% interest rate?

Becky and Sarah are sisters who share a room. Their room can easily get messy, and their parents are always telling them to tidy it. Here are the costs and benefits to both Becky and Sarah, of taking the time to clean their room: If both Becky and Sarah clean, they each spends two hours and get a clean room. If Becky decides not to clean and Sarah does all the cleaning, then Sarah spends 10 hours cleaning (Becky spends 0) but Sarah is exhausted. The same would occur for Becky if Sarah decided not to clean鈥擝ecky spends 10 hours and becomes exhausted. If both girls decide not to clean, they both have a dirty room.

a. What is the best outcome for Becky and Sarah? What is the worst outcome? (It would help you to construct a prisoner鈥檚 dilemma table.)

b. Unfortunately, we know that the optimal outcome will most likely not happen, and that the sisters probably will choose the worst one instead. Explain what it is about Becky鈥檚 and Sarah鈥檚 reasoning that will lead them both to choose the worst outcome.

Will the demand for borrowing and investing in R&D be higher or lower if there are no external benefits?

Which of the following goods or services are nonexcludable?

a. police protection

b. streaming music from satellite transmission programs

c. roads

d. primary education

e. cell phone service

What are the two key characteristics of public goods?
See all solutions

Recommended explanations on Economics Textbooks

Taxation Economics

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.