2.B. The Intermediate Monopolist's Decision Problem For ease of presentation the analysis starts by assuming that innovations are always drastic; that the intermediate monopolist is unconstrained by potential competition from the previous patent. This assumption will be relaxed in Section 5 below. The intermediate monopolist's objective is to maximize the expected present value of profits over the current interval. When the interval ends so do the profits. The only uncertainty concerns the length of the interval. Except in Section 7 below, the monopolist is assumed to take as given the amount of research at each time, and hence also takes as given the length of the interval.