32
The economics of patents.
MR
$/Q
Q/t
D=AR
MC
Q
c
Q
m
P
c
P
m
CS
PS
DWL
w
An ideal patent
would exactly
compensate the
firm for sunk
costs of R&D.
w
P
c
P
m
BD = IJKL.
A
B
C
D
I
J
L
K
w
A patent confers
monopoly power
for 17 years.
