Island Town(IT) as a model system to study Innovation

In the economic system, each industry sector even product line have unique characteristics, which make the problem of innovation both interesting and hard to generalize at the same time. Here, we introduce a model system Island Town (IT) to study the strategies of innovation, monopoly and profitability.

There is a small town called Island Town located on a Island that is detached from the mainland (ML). This island town has many attractions such as restaurants and parks, people on the ML often love to spend time on the island. Since it is a small town, it does not have a full spectrum of industries, as a result, it relies on many businesses on the main land to survive such as post office, banks, etc. The best way to commute between the island town and the main land is a bridge which is owned by a private company Bridge Co (BC). BC installed a toll on the bridge to charge a fee. Because this is the only bridge between the IT and ML, they can charge a hefty fee for passing the bridge, thus the bridge became a profitable business for BC.