Final answer:
It is true that firms use patents, including sleeping patents, to decrease competition by creating a barrier to entry. While patents protect innovation, they can also lead to monopolistic practices. Other methods such as predatory pricing, trademarks, and trade secrets also play a role in decreasing competition.
Step-by-step explanation:
Firms use patents to decrease competition, especially with sleeping patents is true. A patent is a government-enforced barrier to entry that gives the holder the exclusive right to produce, use, or sell an invention for a certain number of years. Patents prevent competitors from entering the market with similar products, which can reduce competition. However, some firms may engage in the practice of holding 'sleeping patents,' meaning they own patents for inventions that they do not actively develop or produce, they just hold them to prevent others from using the ideas.
However, patents also serve an important purpose by providing incentives for innovation and research and development. Without the exclusive rights granted by patents, companies might not invest as heavily in new products because their investment could be easily replicated by competitors without compensation. It's a balance between protecting innovation and avoiding monopolistic practices.
In addition to patents, other measures such as predatory pricing, trademarks, and trade secrets are used by companies to maintain market dominance and decrease competition. Predatory pricing involves temporary price cuts to dissuade new competition, trademarks protect identifying symbols or names, and trade secrets cover confidential methods of production.