On Licensing Policies in Bertrand Competition

Muto, Shigeo

doi:10.1006/game.1993.1015

Cited by 143 publications

(102 citation statements)

References 2 publications

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“…In contrast to Muto (1993) Sen and Tauman (2007) show that, in the case of drastic innovation, an outside innovator licenses only with a fixed-fee and complete knowledge diffusion does not 9 In the terminology of Muto (1993), this is the case of a non-drastic innovation. Since we have experienced that some readers are not comfortable with the terms non-drastic and drastic innovations under product differentiation, we will generally avoid using those terms.…”

Section: Introductionmentioning

confidence: 94%

“…The factors attributed to the presence of output royalty in the licensing contracts offered by outside innovators 3 are asymmetric information (Gallini and Wright, 1990, Beggs, 1992, Poddar and Sinha, 2002and Sen, 2005b, Bertrand competition (Muto, 1993), spatial competition (Poddar and Sinha, 2004), moral 1 Licensing by the universities or independent research labs to the producers may be the examples of this scenario. 2 See Kamien (1992) for a nice survey of this literature.…”

Section: Introductionmentioning

confidence: 99%

“…4 An important feature of the above mentioned papers, except Muto (1993) and Poddar and Sinha (2004), is their focus on homogeneous goods, thus ignoring the effects of product variety. Moreover, Muto (1993) and Poddar and Sinha (2004) fail to capture the effects of product market competition due to their attention to duopoly final goods markets.…”

Section: Introductionmentioning

confidence: 99%

“…First motivation comes immediately from Muto (1993) and Sen and Tauman (2007). Muto (1993), which is most closely related to our paper, shows that royalty licensing can dominate either fixed-fee licensing or auction under Bertrand competition if the licensees' opportunity costs of winning the licenses depend on the type of licensing contract (which occurs under non-drastic innovation) 9 ; however, royalty licensing cannot dominate fixed-fee licensing or auction under Cournot competition, irrespective of whether or not the opportunity costs of winning the licenses depend on the type of the licensing contract (see, Muto, 1988, for the details).…”

Section: Introductionmentioning

confidence: 99%

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Technology licensing in a differentiated oligopoly

Bagchi

Mukherjee

2014

International Review of Economics & Finance

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Abstract:We show the effects of product differentiation and product market competition on technology licensing by an outside innovator. For a certain range of product differentiation, both the innovator and the society prefer royalty licensing compared to auction (or fixed-fee), irrespective of Cournot and Bertrand competition, if the number of potential licensees is sufficiently large. Hence, for such a range of product differentiation, neither the innovator nor the antitrust authority requires information about the type of product market competition in preferring the licensing contract.

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Section: Introductionmentioning

confidence: 94%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Technology licensing in a differentiated oligopoly

Bagchi

Mukherjee

2014

International Review of Economics & Finance

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“…7 Various other reasons have been put forward in the literature on ironclad patents to explain the use of royalties, including risk aversion (Bousquet et al, 1998), asymmetry of information (Gallini and Wright, 1990;Macho-Stadler and Pérez-Castrillo, 1991;Beggs, 1992;Sen 2005a), moral hazard (Macho-Stadler et al, 1996;Choi, 2001), product di¤erentiation (Muto, 1993;Wang and Yang, 1999;Caballero-Sanz et al, 2002;Poddar and Sinha, 2004;Stamatopoulos and Tauman, 2007), strategic delegation (Saracho, 2002), integer nature of the number of licensees (Sen, 2005b), variation in the quality of innovation (Rockett, 1990). 8 In Farrell and Shapiro (2008) and Encaoua and Lefouili (2009), the licensor is assumed to o¤er two-part tari¤ licensing contracts.…”

Section: Introductionmentioning

confidence: 99%

Optimal licensing of uncertain patents in the shadow of litigation

Amir¹,

Encaoua²,

Lefouili³

2014

Games and Economic Behavior

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This paper investigates the choice of a licensing mechanism by the holder of a patent whose validity is uncertain. We provide su¢cient conditions of a general nature under which the licensor prefers to use a per-unit royalty contract. In particular we show that this is the case for the holders of weak patents if the strategic e¤ect of an increase in a potential licensee's unit cost on the equilibrium industry pro…t is positive. The latter condition is shown to hold in a Cournot (resp. Bertrand) oligopoly with homogeneous (resp. di¤erentiated) products under general assumptions on the demands faced by …rms. As a byproduct of our analysis, we contribute to the literature on the cost paradox in oligopoly by o¤ering some new insights of independent interest regarding the e¤ects of cost variations on Cournot and Bertrand equilibria.

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Absorptive capacity, product heterogeneity and technology licensing under different fee scenarios

Wenqing,

Jie

2024

Manage Decis Econ

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Since a licensee does not always fully absorb technology in the process of technology licensing, based on the consideration of incomplete absorption, this paper establishes a game model consisting of a technology research and development firm and two licensee firms, to explore the most licensing strategies of the licensing firms as well as the optimal social welfare of the licensee under different fee scenarios. The results of the study show that (1) under the flat fee scenario, technology R&D enterprises will choose royalty licensing in most cases, but when the gap in the absorptive capacity of the licensed enterprise is small and the difference in the quality of the products between the two licensing parties is large, fixed‐fee licensing is a more preferable option;(2)in the differential fee scenario, technology R&D firms prefer differential fixed fee licenses;(3)when technological empowerment occurs, local social welfare is enhanced;(4)technology development firms prefer firms with high absorptive capacity, but also charge higher fees;(5)differential fees charged by technology R&D firms to authorized firms do not always lead to a relative decline in local social welfare; they can lead to a greater enhancement of social welfare within a certain interval, and the enhancement is even greater than the enhancement of social welfare brought about by uniform fees.

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On Licensing Policies in Bertrand Competition

Cited by 143 publications

References 2 publications

Technology licensing in a differentiated oligopoly

Technology licensing in a differentiated oligopoly

Optimal licensing of uncertain patents in the shadow of litigation

Absorptive capacity, product heterogeneity and technology licensing under different fee scenarios

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