If a Strong System of Appropriability Exists, the Innovator

question 3

Multiple Choice

If a strong system of appropriability exists, the innovator:

• A)Cannot capture a significant portion of the created value
• B)Cannot acquire the property rights of its innovation
• C)Can capture a significant portion of the created value
• D)Should try to sell its innovation to a large firm

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Definitions:

Tying

A sales strategy where a seller requires buyers to purchase a secondary product or service together with the primary product.

Output Effect

The change in total revenue resulting from a change in quantity sold, holding price constant.

Price Effect

The price effect describes how changes in price influence the quantity demanded or supplied in the market.

Oligopolist

A market participant in an oligopoly, a market dominated by a small number of firms.