True or False? Incentives to innovate, such as patents, trademarks, and copyrights, have the additional effect of assisting firms in acquiring monopoly power.

Question

True or False?

Incentives to innovate, such as patents, trademarks, and copyrights, have the additional effect of assisting firms in acquiring monopoly power.

a. True

b. False

Answer 1

Absolutely true. The patent or copyright grants the owner the right to exercise mononoply power and earn profit which cannot be competed away.