The argument that concentration of market power enhances research and development efforts may be weak because:
A) Monopolies cannot afford basic research.
B) No one has attempted to gather any empirical evidence.
C) A monopoly may have no clear incentive to pursue new research and development.
D) No existing monopoly has a research and development program.

Question

Quizplus · Accepted Answer

A monopoly may not have a clear incentive to pursue new research and development because they are not facing competition that would push them to innovate in order to maintain their market position. Without the threat of competition, a monopolist could simply focus on maintaining their existing market power and not invest in new R&D.

The Argument That Concentration of Market Power Enhances Research and Development