Lecture
This lecture delves into the economic and social value of innovation, exploring concepts such as consumer surplus, profit distribution, and social inefficiency. It discusses the impact of market power on pricing strategies, the shadow value of resources like bookstores, and the disruptive effects of companies like Amazon and Airbnb. The lecture also analyzes the positive externalities of innovations like Wikipedia, emphasizing the democratization of knowledge and information production. Through various examples, the instructor illustrates how innovation can generate significant benefits to society, leading to a great welfare improvement.