If firms in an industry are generating knowledge that other firms can use without paying for it, this industry is characterized by

Question

Quizplus · Accepted Answer

When firms generate knowledge that other firms can use without paying for it, it implies that there are external or spillover effects. In this case, the spillover effect is positive, meaning that the social benefits (including both private benefits and the external benefits) exceed the private benefits. This is characteristic of an industry with positive externalities, also known as a knowledge spillover industry.

If Firms in an Industry Are Generating Knowledge That Other