Economists who contend that oligopolists have a strong incentive to engage in R&D say that:
A) the undistributed profits of oligopolists give them a source of readily available,relatively low-cost funds for financing R&D.
B) entry barriers enable oligopolists to sustain the profit it gains from innovation.
C) the large size of oligopolists' R&D departments allows them to use very specialized,expensive R&D equipment and employ teams of specialized researchers.
D) all of these are true.

Question

Quizplus · Accepted Answer

All of these statements are true. Oligopolists have undistributed profits, which can be used to finance R&D, and their size and market power allow them to sustain the profits from innovation through entry barriers. Additionally, the large size of their R&D departments gives them the resources to use specialized, expensive R&D equipment and employ specialized teams of researchers.

Economists Who Contend That Oligopolists Have a Strong Incentive to Engage