Other things equal, the prospect of imitation by others
A)decreases the expected rate of return on R&D expenditures.
B)increases the expected rate of return on R&D expenditures.
C)increases the interest-rate cost of funds used to finance R&D expenditures.
D)decreases the interest-rate cost of funds used to finance R&D expenditures.

Question

Quizplus · Accepted Answer

The prospect of imitation by others decreases the expected rate of return on R&D expenditures because if others can easily copy or imitate the innovations, the original innovator will face competition sooner, reducing the profits that can be earned from the innovation.

Other Things Equal, the Prospect of Imitation by Others