ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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No transportation cost
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Perfect information to all the participants
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Presence of large number of firms
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Presence of patents
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Detailed explanation-1: -A patent is the right to exclude competitors. A patent has direct anti-competitive effects as a product will have a higher price if it embodies a patented technology due to market power conferred by the patent.
Detailed explanation-2: -Limitation of patent rights If the government is of the opinion that the patent holder is not using the patented invention for profit, then it can grant a compulsory license to a third party. Section 84 and Section 92 of the Patents Act provides for compulsory license.
Detailed explanation-3: -Patents can block competitors’ innovation activities and slow the diffusion of innovations through the legal protection of patented invention, but competitors can quickly circumvent patents.
Detailed explanation-4: -The grant of a patent gives one the right to exclude others from making, using or selling the claimed technology for 20 years from the date of filing. Patent applications are secret during the period of review, which can take years.