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Patents allow firms to collect additional profit from their inventions however, they raise the prices of...

Patents allow firms to collect additional profit from their inventions however, they raise the prices of products that are patented by eliminating competition. Should we, as a society, continue to have patents? Why or why not? Be sure to use externalities in your answer.
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Answer #1

Patents are used to protect the inventions.Patents thus provide a limited degree of monopoly to the owners.Patents offer more incentives for new technologies.But since the patents allows monopolization of the market by the owners of innovation the society suffer from the patents by paying a supra competitive cost.But without the patents the new innovations will not take place in the economy.Patents will also reduce the supply in the economy and will create a dead weight loss to the society.Patents will lead more externalities as it allows more monopoly and reduces the competition from others.Eventhough there are negative effects of patents in my opinion there should be limited amount of patents in the society as patents will provide more incentives for innovation.

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