Chapter 14 – Monopolies and Antitrust Where do monopolies come from? 1. Government blocks the entry of more than one firm in the market a. By granting a patent or copyright to an individual or firm, which gives it the exclusive right to produce a product i. Patent – the exclusive right to a product for a period of 20 years from the date the product was invented 1. do so to encourage firms to spend money on the research and development necessary to create new products. 2. Ex. Drugs ii. Copyright – a government-granted exclusive right to produce and sell a creation 1. For books, films, and software 2. Creator’s heirs retain exclusive right for 70 years after the creator’s death b. By granting a firm public franchise , which makes it the exclusive legal provider of a good or service i. Eg. State and local governments will designate one company as the sole provider of electricity, natural gas, or water 2. One firm has control of a key raw material necessary to produce a good 3. There are important
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This note was uploaded on 04/02/2008 for the course ECON 102 taught by Professor Rossana during the Spring '08 term at University of Michigan.