Economics 12th Edition by William Baumol, Alan S Blinder

Exercise 9

(More difficult) A firm holds a patent that is estimated to be worth $20 million. The patent is repeatedly challenged in the courts by a large number of (moneyseeking) firms, each hoping to grab away the patent. If anyone is free to challenge the patent so that there is free entry into the litigation process, how much will end up being spent in the legal battles ( Hint: Under perfect competition, should firms expect to earn any economic profit )