Microeconomics Homework

patent of invention is defined as the pack of rights of an investor or his assignee to have exclusive rights disposed(p) by the state for a set terminal figure time in interchange for a disco truly of an invention (Freeadvice.com 2008 1). base from this definition of unembellished, it is already exit that an singular can have the freedom to only if produce a received heartfelt given that he/she invented it. This sole take of an individual or a unwavering triggers for the existence of monopoly in the merchandise.Monopoly requires only a single maker and many buyers. Therefore, with the promote of overt, an individual can easily prosecute into monopoly since the presidency would provide that say somebody legal protection and privilege to be the sole producer of a plastered good after a circumstantial period of time. This legal protection of a certain invention serves as the obstruction for some otherwise people to reproduce it other than the inventor or his a ssignee.As for the case, callable to the uncovering of sucralose as a easing for sugar the state awarded Tate & adenosine monophosphate Lyle its shoes rights over sucralose leaving them the sole producer of the said products. Since the company is the sole producer in the commercialise of sucralose, it turned erupt that the company already created monopoly in the market place. otherwise market players can only soak up to produce sucralose only by 2020, which means, no other market entities ordain be able to supply the market with the said product other than Tate & Lyle for the abutting 12 years.Using examples from the data, explain why firms take prohibited patents.It was identified and give tongue to on the given case that the production of stuffyised sweeteners in the market is very winningsable to a point wherein to the last schoolest degree 20 percent of the total profit of Tate & Lyle comes from their production of sucralose. Tate & Lyle is already on the process of putting to a greater extent manufacturing plants to further growth their production efficiency to supply the high demand of bionic sweeteners in the market which eventually to the skill of more profit out of their production.This high profitability in the monopoly of Tate & Lyle of sucralose do other firms in the market to thirstily find ways to enable them to similarly produce artificial sweeteners in the market legally. Even if the patent becomes expired by 2020, the demand of artificial sweeteners get out be high enough to accommodate the accounting entry of other producers of artificial sweeteners in the market. In addition to this, since Tate & Lyle charges high prices on their artificial sweeteners, industries that accustom artificial sweeteners as one of their inputs motiveed to take out the patent rights of Tate & Lyle to lower downhearted the price of artificial sweeteners in the market as controversy step into the market.Although artif icial sweeteners are already cheaper as compared to stately sugar in the market, industries would good-tempered want to further lower down its prices by infusing market competition through get rid of Tate & Lyles patent rights over the production of artificial sweeteners in the market.Discuss whether patents in the artificial sweeteners market lead to market efficiency or market failure.Read alsohomework Solutions Chapter 3Although not implied directly on the given case, but certainly, the existence of patent rights to Tate & Lyle causes failure in the market. monetary value of artificial sweeteners would not be that high if there is competition existing in the market. Consumer welfare will surely amend if price level of artificial sweeteners in the market would go down. There will also be enough style for those companies that uses artificial sweeteners to minimize their production costs, thereby leading to cutting of the prices of their products. In this regard, it is c lear that it is not only the consumers that will be benefited by the removal of patent rights to Tate & Lyle but also other firms that use artificial sweeteners as a factor in of production as substitute to the conventional sugar in the market.Yes, it is true that the discovery of artificial sweeteners provided benefits to the market as a replacement to sugar, but that benefits can still be further change if its prices will be controlled by market competition and not by simply monopolizing federal agent whos goal is to on how to increase their profit through utilizing the bundle of rights that was given by the political relation. But on the other side of the coin, of the government would remove office rights to those who will discover something new in the market, there is a big disaster that they will be de-motivated to have an opening night to conduct researches and make inventions since it will be easily copied by other firms in the market thereby defeating the initial offer of conducting research provide ways to improved the market position of the company.Well, this scenario is inevitable since the government would still have to protect the amuse of the consumers as considerably as the inventors. As an alternative to solve this problem of modify the quality of welfare of both parties, the government could provide patent rights to a certain company but with a condition of setting floor price or price ceiling in dictate to protect the interest of the consumers as well as the company itself.Works CitedFreeadvice.com (2008). What is Patent online? Available http//law.freeadvice.com/resources/gov_material/patent_trademark_office_patent_defined.htm Accessed 1 March 2008.