Assignment:
Q1. Why does a monopolist have less incentives to innovate than a perfectly competitive firm? Explain the meaning of the ‘replacement effect’.
Q2. Why does a monopolist threatened by entry have more incentives to innovate than a potential entrant? Explain the meaning of the ‘efficiency effect’.
Q3. Explain why firms might invest too much in R&D (from a social point of view) when they are racing to obtain a patent on an innovation.
Q4. Discuss the effects of strategic behaviour on firms’ investments in R&D.
Q5. Is it a sensible policy to allow firms to coordinate their R&D decisions? Discuss.
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.