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This article discusses how monopolies may have more incentive to innovate than economists have thought. A lot of attention has been paid to the ill effects of monopoly. In essence, the trouble with monopolists is that they can set prices almost as they please. Joseph Schumpeter, an Austrian economist, pointed out many years ago that established firms play a big role in innovation. A paper published a few years ago by Richard Blundell, Rachel Griffith and John Van Reenen, of Britain's Institute for Fiscal Studies, did much to resolve this empirical question. Mr Blundell and his colleagues found that the pharmaceutical industry provided the strongest evidence of correlation between market share and innovation.