Ordinarily, governments attempt to promote competition in markets.Why do governments use patents to block entry into some markets when this prohibits competition?
A)Patents encourage firms to spend money on research necessary to create new products.
B)Politicians sometimes succumb to pressure from lobbyists to grant favors to businesses for political reasons.
C)Patents are an important source of government revenue.
D)Patents are justified because they are an important means for creating network externalities.

Question

Quizplus · Accepted Answer

Patents provide a temporary monopoly to the inventor, which incentivizes them to invest resources in research and development. This can lead to the creation of new products that would not have been developed without the promise of exclusive rights. Eventually, the patent expires and other firms can enter the market, increasing competition.

Ordinarily, Governments Attempt to Promote Competition in Markets