B.INNOVATION AND INFORMATION
The world of imperfect competition contains many different species, from huge” corporations to tiny e-commerce vendors on the Internet. Much of the output of a modern .economy is produced by the largest corporations like General Electric. General Motors, and AT&T.Almost one-third of our total output is produced by the largest 500 firms. These organizations are qualitatively different from competitive firms. They possess enormous resources. and they . operate globally in many markets simultaneously. Their survival depends not just on pricing but also on developing new commodities. new technologies and new markets that can payoff for years “to come, In this section we examine the behavior of large firms and the issues raised by the increasing importance of information as an economic commodity. We begin by examining the role of control and bounded rationality. We next look at the significance of large “firms in innovation and then discuss the novel issues raised by the Internet and the growing problem of intellectual property rights.
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