Author Question: There are circumstances where a prize may induce research effort better than a patent. Indicate ... (Read 62 times)

fbq8i

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There are circumstances where a prize may induce research effort better than a patent.
 
  Indicate whether the statement is true or false

Question 2

As a means of motivating research and development, a patent may stimulate either too much or too little research, relative to the socially optimal level.
 
  Indicate whether the statement is true or false



Liamb2179

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Answer to Question 1

T Offering a prize will call attention to the need for a discovery, and thereby attract effort to make the discovery, whereas patents reward individuals who make discoveries and presume the need for them.

Answer to Question 2

T When only a part of the consumer surplus gain may be appropriated by the discoverer, there may be too little research. When firms might gain at the expense of other sellers, even when consumers gain little, there can be too much research.



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