Final answer:
Competition with existing technology drives innovation as firms seek to outperform rivals and gain temporary market advantages, leading to above-normal profits. Continuous innovation is essential to develop cost-effective products or those with unique features, and governments can encourage this through policies like patents.
Step-by-step explanation:
Competition with existing technology is a significant driver for the development of technology, primarily because it facilitates innovation and allows a company to achieve a competitive advantage. Gregory Lee, CEO of Samsung, emphasizes the importance of continuous innovation as it empowers consumers with new possibilities and provides a company with a temporary lead in the market. This edge often translates to above-normal profits before competitors adapt and catch up.
Moreover, competition ensures that a firm strives to produce products more cost-effectively or to develop products with desirable features sought by consumers. Such market competition drives firms to invest in research and development despite the potential risks associated with the uncertain future of technology and the challenges of broad technology availability that could dilute the incentives for innovation.
To further encourage innovation, governments can implement policies like patent systems that strike a balance between rewarding creators and fostering a competitive market, thus maintaining a healthy environment for technological progress.