Why Are the Private Returns to Innovation Likely to Be

Multiple Choice

Why are the private returns to innovation likely to be smaller than the social returns to innovation?

A) Innovations are not likely to be profitable unless a large number of firms get involved in the production of the new technology.
B) Innovators are often so tempted by greed that they keep their innovation a secret, so the rest of society does not know of the innovation and cannot take advantage of it.
C) The ideas that a person or firm comes up with may leak to the rest of society, so the advantages of the innovation are not limited to the profits the innovator enjoys.
D) The first firm to come up with an innovation usually cannot make a profit with the innovation until other firms learn about it and copy it.