All the other companies do not sell anything and they make zero profits.

So with that simple calculation we can calculate, we can figure out, what the

value of an innovation is for a firm that is currently in a competitive market.

So the total value of an innovation is simply by comparing the profits with innovation,

with the profits without innovation. So the profits with innovation, we know,

are 9,900. Profits without innovation are 0.

And so, therefore, the difference and the value of innovation is simply, 9,900

minus 0, right? So that's going to take us to 9,900.

That is the value of innovation. That is how much each firm is going to be

willing to pay the get the patent that reduces the production cost from 300 to

200 Euros. So given that we've now looked at the

competitive market, let's now have a look in the next video at what the

monopolistic market is going to tell us. Thanks very much, and I'll see you in a

second.