Discussion Action

you will explain why allocation decisions are usually considered to be better for society under competition than under monopoly. For your initial discussion post, choose ONE of the two options below. OPTION 1 INNOVATION AND BARRIERS TO ENTRY In this discussion, you will explore the delicate balance that patent policy must strike between encouraging innovation and stifling competition. Patents are a two-edged sword. On the one hand, patent royalties remunerate people for the research and development costs and the risk incurred in developing a potentially valuable new product. On the other hand, patents create monopolies that potentially stifle innovation and competition. An example is Qualscomm, a company that designs, develops and markets its chips while outsourcing production of its chips to specialized chip manufacturers overseas. Qualcomm makes much of its profit licensing its wireless patents to the makers of smartphones. In 2019, the Federal Trade Commission (FTC) won an antitrust suit against Qualcomm, alleging that Qualcomm used its dominance in the wireless chip market to overcharge Apple and other smartphone makers for use of its chips, technology, and intellectual property. Timothy Lees 2019 summary of the case in his article How Qualcomm shook down the cell phone industry for almost 20 years / What makes Qualcomms business practices unfair? How (if at all) does Qualcomms behavior go beyond an effort to recoup its R&D costs and earn a premium for its innovative technology? How (if at all) does its behavior potentially stifle innovation by competitors? Explain. OPTION 2 NO SUCH THING AS A FREE LUNCH (OR PRINTER) When you buy a computer printer or home fax, or a cell phone (there are other examples), you can sometimes get it for free after the rebate. Why would the firm sell it to you for a zero price? (The answer isnt that it wants to be nice.)