View the step-by-step solution to:

3a (30%). Suppose that a firm introduces a profitable innovation that reduces production costs. As a result, rival firms suffer wealth losses, and...

This question was created from 2018 ClassAssignment.pdf https://www.coursehero.com/file/32334093/2018-ClassAssignmentpdf/

32334093-197754.jpeg

can someone explain it for me

32334093-197754.jpeg

3a (30%). Suppose that a firm introduces a profitable innovation that reduces
production costs. As a result, rival firms suffer wealth losses, and some will go out
of business, although historically, the old production methods usually survive for a
time before disappearing completely. Show that society receives a net gain from this innovation in the sense that its
benefits to society are greater than its costs, even if we don’t count the innovator’s profits and even if the innovator is able to exercise some market power after
innovating. (Him: Think in terms of consumer and producer surplus.)

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question