Effects of Innovation and Technology

ECO/365

Steve Cain

January 24, 2013

What are the effects of innovation and technology on the cost of production?

Technological advance lowers the costs of production and makes economies more efficient while producing more output with the same number of inputs. It will cause the cost function to shift down and so this will generate a monopoly power given by the government through patents.

How does technology affect market structure and real-world competition?

Originally before markets existed the economies developed slowly. After the markets developed into existence technology grew ramped because individuals gained incentives in the form of profits. Globalization of the economy provides a greater incentive to develop new technologies because the revenue that can be generated from global make with over 6.7 billion people (world population) is greater in that the revenue that can be generated from about 300 million people (USA population).

Which market structure is best suited for technological innovation? Explain your answer.

"Dynamic efficiency refers to a market's ability to promote cost-reducing or product enhancing technological change" (Colander, 2010, p. 396). Market compositions that support technological change are dynamically efficient. Oligopoly provides the best market structure for technological advance because it has the four market structures; perfect competition, monopolistic competition, monopoly, and oligopoly.

How have technological innovations affected your organization?

Modifications in communication technologies have possessed a major impact on all businesses. What comes to mind is the restaurant business who then can take your order online for delivery orders or holding a hand held, and mobile computer (iPod).

The transformation have maximized time, saved money, and permitted businesses to use or provide advanced modernization of technology at affordable prices.

References

Colander, D. C. (2010). Economics (8th ed.). New York, NY: McGraw-Hill.

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