Unit 21 Flashcards
Invention
We use the word innovation to refer to both the development of new methods of production and new products (invention)
Radical innovation & Incremental innovation
diffusion
and the spread of the invention throughout the economy (diffusion)
Process innovation
Producing a good at lower costs than its competitors
Product innovation
A new product that will attract buyers
radical innovation
creating a brand new technology or idea which delivers new value
Incremental innovation
Innovates a existing technology/service/product
innovation rents
Individuals or companies who deliver a socially beneficial innovation, deliver a profit above the opportunity cost of capital
general-purpose technologies
Technological advances that can be applied to many sectors, and spawn further innovations. Information and communications technology (ICT), and electricity are two common examples.
Codified knowledge
Knowledge that canoe written down, and can be copied by others and be implemented (such as a formula to make drugs)
tacit knowledge
Knowledge made up of the judgements, know-how, and other skills of those participating in the innovation process. The type of knowledge that cannot be accurately written down.
Non-compete contract
A contract of employment containing a provision or agreement by which the worker cannot leave to work for a competitor. This may reduce the reservation option of the worker, lowering the wage that the employer needs to pay
complements
Two goods for which an increase in the price of one leads to a decrease in the quantity demanded of the other. See also:
Substitutes
Two goods for which an increase in the price of one leads to an increase in the quantity demanded of the other
network external effects
An external effect of one person’s action on another, occuring because the two are connected in a network
winner-take-all competition
Firms entering a market first can often dominate the entire market, at least temporarily