The monopoly firm has a patent that is about to expire. A new start-up firm has entered the market with a new method and has applied for patent protection. Which of the strategies below make the most economic sense for the monopoly firm?
The correct answer to the following question will be "Acquire start-up firm and Continue production".
Explanation:
Because of reasonable competition and comparatively low cost, a monopoly company can achieve long-term profit and continue or expand development.
After some time, a monopoly that persists in stopping the entrance of new companies or firms capable of producing its commodity would see its obstacles bypassed by inventions, and it is, therefore, necessary for a dominant corporation to adapt the business strategy and stay current with industry changes.
Hence purchasing the start-up company would make good business sense for themselves.
