Because knowledge capital is nonexcludable and nonrival,firms have an incentive to ________ the research and development of other firms.
A)make bids on
B)not use
C)ignore
D)free ride on

Question

Quizplus · Accepted Answer

A nonexcludable good is one that cannot be denied to someone who has not paid for it. A nonrival good is one where consumption by one person does not diminish the availability of the good to others. Knowledge capital falls into these categories as it can be used by multiple firms without being depleted. Therefore, firms have an incentive to free ride on the research and development of other firms, meaning they can benefit from the knowledge without paying for it or doing their own research.

Because Knowledge Capital Is Nonexcludable and Nonrival,firms Have an Incentive