Question

Properties of Ideas

a. Define the concepts of rivalry and excludability.

b. Is it possible to make ideas excludable? How?

c. Identify the pros and cons of making ideas excludable.

Answer 1

Ans

a) Exludability is the property of the good wherein its consumption can be prevented for those people who have not paid for the good.

Rivalry is the property of the good wherein the consumption if a good by one person reduces its benefits to the other person.

b) Yes, it is possible to make ideas excludable through the government’s use of patents and intellectual property rights.

c) Advantage of making ideas excludable is that the inventors are incentivised to develop more new ideas because they are sure that their ideas cannot be used by other without there permission and they get to earn the value of the time and energy spent on developing an idea.

Disadvantage of making ideas excludable is that it can make the innovators to charge higher for their innovation creating a market inefficiency. Also, if the knowledge is not freely available it becomes difficult to innovate that idea.

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