Friedman, have argued that such laws are not desirable. In the United States, there is no intellectual

property protection for food recipes or for fashion designs. Considering the state of these two industries,

and bearing in mind the discussion of the inefficiency of monopolies, can you think of any reasons why

intellectual property laws might hinder innovation in some cases?

29. Imagine that you are managing a small firm and thinking about entering the market of a monopolist. The

monopolist is currently charging a high price, and you have calculated that you can make a nice profit

charging 10% less than the monopolist. Before you go ahead and challenge the monopolist, what

possibility should you consider for how the monopolist might react?

30. If a monopoly firm is earning profits, how much would you expect these profits to be diminished by entry

in the long run?

Problems
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