Asked by Elizabeth Gossum on May 09, 2024
Verified
Firms often use patent rights as a:
A) barrier to exit.
B) barrier to entry.
C) way to achieve perfect competition.
D) none of the above
Patent Rights
Legal rights granted to an inventor or assignee to exclusively make, use, or sell an invention for a certain period of time.
Barrier to Entry
Factors that make it difficult for new firms to enter an industry, including high startup costs, stringent regulations, and established brand loyalty.
- Recognize the factors that inhibit perfectly competitive markets including barriers to entry.
- Describe the role of patents and property rights in market competition.
Verified Answer
TB
Tania Barbosa
May 15, 2024
Final Answer :
B
Explanation :
Firms often use patent rights as a barrier to entry, preventing competitors from producing or selling similar products or technologies. This can give the patent holder a monopoly in the market and increase their market power. Patents do not serve as a barrier to exit, as they do not prevent a firm from leaving a market. They also do not contribute to achieving perfect competition, which requires a large number of small firms with no market power.
Learning Objectives
- Recognize the factors that inhibit perfectly competitive markets including barriers to entry.
- Describe the role of patents and property rights in market competition.
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