In the inverted-U theory of R&D, which of the following industry concentration ratios would be most conducive to R&D (as a percentage of firm sales)?
A) 1 percent
B) 10 percent
C) 50 percent
D) 70 percent

Question

Quizplus · Accepted Answer

The inverted-U theory suggests that R&D is most conducive at moderate levels of industry concentration, where firms have enough market power to fund R&D but still face enough competition to innovate. 50 percent concentration represents this moderate level.

In the Inverted-U Theory of R&D, Which of the Following