Last update: 3 Nov 2004
This is the final list for the quiz on November 9.
1. What are sunk costs? Why do they matter for the decision to adopt a new technology?
2. Can you give any examples of a diffusion that failed (that is, started to take off and then collapsed rather quickly)?
3. In class we focus on the economic determinants of the diffusion of
innovations. Based on your reading of Hall, can you suggest some
non-economic influences?
4. When a technology exhibits network externalities, will adoption be too fast or too slow? Why?
5. Why do technological standards give rise to network externalities?
6. Will a network supplied by a monopolist always be smaller than that supplied by a competitive market?
7. Read Scotchmer Chapter 10.3 and explain how we pay for the internet.
8. Explain the basic difference between patent law and copyright law as it concerns blocking rights.
9. Explain why blocking rights are important in setting the
incentives for successive innovators. In answering this,
distinguish between (a) two stages of innovation (basic and applied
research), and (b) a quality ladder where each innovator is replaced in
the market.
10. Explain why progress is accelerated if successive innovators
share the knowledge they create. How do researchers in the
academic environment share knowledge? How do researchers in the
business environment share knowledge? In the commercial environment, is
there a conflict between the profit motive and knowledge sharing?
Give a reason that the profit motive might be more conducive to
information sharing than incentives in the academic environment.
11. Give three notions of patent breadth, two relating to horizontal
competition, and one relating to quality ladders (vertical
competition). For each notion, explain the economic consequences
of increasing the breadth of patents.
12. What is the "ratio test" for deciding how to structure a patent
right? Using this test, explain why it might be socially better
(in the sense of minimizing aggregate deadweight loss) to have a long,
narrow patent right rather than a short, broad one.
13. Public sponsors of R&D such as the NIH are often criticized for
wasting resources in administrative costs. Is an incentive system
based on intellectual property rights immune from such costs?
(Refer to the costs of enforcement.)
14. Critique the following statement: "The main costs of low-quality patents are litigation costs."
15. Suppose that there is a subject matter for which litigation is rare
(there are not many!). Does this mean that the damages that would
be awarded in case of infringement are irrelevant to incentives?
16. Should the Antitrust division of the Department of Justice
use market share to evaluate monopoly power in a network
industry? Discuss.