For trade secrets to effectively protect intellectual property, it is important that the innovation cannot be easily reverse engineered, a process by which a firm can take a rival’s product and determine how it was produced. Patents are important when reverse engineering is easy. In the chemical business, firms try to develop lower- cost processes for producing chemical products, but the chemical product itself does not change. Therefore, examining the product does not reveal the new process, so reverse engineering is not feasible. With a computer chip, on the other hand, the innovation is embodied in the chip, so rivals can copy the chip. Which industry would you expect to rely more on trade secrets? Explain briefly.
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