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    R & D Under Perfect Competition

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    If all the assumptions of perfect competition hold, why would firms in such an industry have little incentive to carry out technological change or much research and development? What condition would encourage research and development in competitive industries?

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    We will see an incentive to innovate because in perfect competition all firms are price takers. This means that if they ...

    Solution Summary

    Assumptions of perfect competition and how they affect incentives for research and development