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Idea Arbitrage: Steal Ideas and Products From Someone Else

7 December, 2015 - 09:25

Taking ideas from others is idea arbitrage. 1 If the idea is not patented or copyrighted, it will be copied. And even if it is copyrighted or patented, it will probably still be copied. 2 Legal searching for ideas can come from a variety of sources including basic science journals, the popular press, conferences, and trade associations. As noted earlier, innovation benefits from search. And usually, the more sources you search, the better (this is probably true up to about 11 outside sources). The ideas can also come from other countries and cultures. There is a Web site in China called AliBaba.com where there are literally thousands of products that have never been seen in the West. With idea arbitrage, the goal should be to steal the gem and not the entire crown. Take the best ideas and combine them in order to differentiate your products from the competition.

One interesting application of the idea arbitrage is Etsy.com. Etsy is an online store that provides a market for crafts and handmade items. It has drawn on ideas from both Amazon and eBay and has recently begun to encroach on both eBay’s and Amazon’s market. It is a superb example of a monopolistic competition marketplace, where product differentiation rules the day.