Unformatted text preview: develop similar products, and restore homogeneity in the market. While the firm that originally invested in the technology change has to put up with all the research and development costs, the other firms just get to copy the idea and reap the benefits. Such a situation thus gives little incentive for firms in a perfectly competitive market to attempt a technological change or carry out much research and development. Strong patent rights, intellectual property rights, and copyright laws can go a long way in encouraging firms in competitive industries to undertake research and development efforts, create innovative products, and exclusively receive the rewards. Reference: http://www.landandfreedom.org/econ/econ8f.htm...
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- Spring '12
- similar products, perfectly competitive market, technological change