A . What is the theory of creative destruction? b. According to this theory, do we need to worry about the fact that our local power utility has a monopoly in the provision of electricity?

a . This is the idea that, although it may be difficult for firms to break into a monopolized industry, it is
less difficult for them to break the monopolized industry's hold on a market by offering a
technologically superior alternative to consumers.
b. No, because technological change might be a very effective regulator of monopoly power over the
long run. Although it is hard to compete against the local utility with a given level of technological
knowledge, it may be less hard to compete once technology improves.