On the duration of technology licensing

Gordanier, John; Miao, Chun‐Hui

doi:10.1016/j.ijindorg.2011.04.003

Cited by 5 publications

(13 citation statements)

References 77 publications

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“…9 In case no agreement is reached between the patent holder and …rm i, the patent holder cannot try to reach an agreement with …rm j. The results we obtain are qualitatively robust to this assumption, except that it makes more likely that the patent holder will choose complete technology di¤usion (see Sempere-Monerris and Vannetelbosch, 2001).…”

Section: Fixed Fee Licensing Gamementioning

confidence: 65%

“…Firm j will continue producing with the old technology. 9 The patent holder and …rm i are assumed to be impatient. The patent holder and …rm i 8 It is implicitly assumed that in the meantime …rms continue producing using the old technology and that the length of the negotiation is short compared to the duration of the contract.…”

Section: Fixed Fee Licensing Gamementioning

confidence: 99%

“…Recently, Gordanier and Miao () have analyzed a multi‐period model with potential future innovations and some irreversibility of technology transfer where an innovator jointly decides the payment scheme and the length of the contract. They have found that it may be optimal to license the innovation for less than the full length of the patent and that royalty contracts can be more profitable than fixed fee licensing even in the absence of private information.…”

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confidence: 99%

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Bargaining and delay in patent licensing

Mauleón

Vannetelbosch

Vergari

2013

Int J of Economic Theory

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We consider amodel for licensing a non-drastic innovation in which the patent holder (an outside innovator) negotiates either up-front fixed fees or perunit royalties with two firms producing horizontally differentiated brands and competing `a la Cournot. We investigate how licensing schemes (fixed fee or per-unit royalty) and the number of licenses sold (exclusive licensing or complete technology diffusion) affect price agreements and delays in reaching an agreement.We show that, under complete information, the patent holder prefers to license by means of upfront fixed fees whatever the degree of product differentiation, the innovation size and the level of bargaining power. Once there is private information about the relative bargaining power of the parties, the patent holder may prefer licensing by means of per-unit royalties even if market competition is strong. Moreover, the delay in reaching an agreement is greater whenever the patent holder chooses to negotiate up-front fixed... JEL classi…cation: C78; D21; D43; D45; L13.CEREC, Saint-Louis University -Brussels; CORE, University of Louvain, Louvain-la-Neuve, Belgium. y CORE, University of Louvain, Louvain-la-Neuve; CEREC, Saint-Louis University -Brussels,Belgium. E-mail: vincent.vannetelbosch@uclouvain.be z Department of Economic Sciences, University of Bologna, Bologna, Italy.We thank an anonymous referee for useful comments. We also thank Paul Belle ‡amme, GianpaoloRossini and seminar audience at

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Section: Fixed Fee Licensing Gamementioning

confidence: 65%

Section: Fixed Fee Licensing Gamementioning

confidence: 99%

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confidence: 99%

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Bargaining and delay in patent licensing

Mauleón

Vannetelbosch

Vergari

2013

Int J of Economic Theory

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“…Even though the theoretical models implicitly assume that a license remains valid for the lifetime of the patent, most real-life licensing agreements end before the patent expires. Particularly, Gordanier and Miao (2011) find that it may be optimal to license the innovation for less than the full patent lifetime. In a study of licensing agreements signed in the period 1990-1993 and involving at least one US participant, Anand and Khanna (2000) reported that no agreement lasted more than 10 years, even though US patent protection ranges from 14 to 20 years.…”

Section: Related Literaturementioning

confidence: 99%

The role of short‐term contracts and subsidies in licensing

Antelo¹,

Bru²

2020

R & D Management

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An innovator without production facilities owns a patented invention that lasts two periods, and looks for the best licensing arrangement with a producer that has private information about the market value of the invention. The license is either a single long-term contract in force over both periods or a series of short-term contracts, one per period. Under shortterm contracts, the licensee can strategically signal the value of the invention with its level of production in the first period and thus influence the terms of the contract in the second period. We show that the licensor prefers successive short-term contracts rather than a single long-term contract for intermediate-level probabilities of dealing with an efficient licensee, while the first-period contract may optimally include a per-unit subsidy (a negative royalty rate) in order to correct signaling distortions in the licensee's production for this period. We also show that prohibiting such subsidies can lead to welfare losses.

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“…More importantly, we differentiate the roles a firm played in its prior deals according to whether they were acting as licensees (i.e., buying or in-licensing another firm’s technology) or licensors (i.e., selling or out-licensing their own technology) in prior deals. By accounting for a firm’s role-specific deal experience, we are able to disentangle the experiential learning benefits from prior deals, which tend to result in lower transaction costs going forward, from the accumulated monitoring costs associated with prior out-licensing deals, which tend to persist even beyond the term of the license (Gordanier & Miao, 2011; Williamson, 1991). Given the long shadow cast by prior deals, the accumulation of such costs may outweigh the incremental experience benefits, thereby shaping firms’ abilities to obtain preferred licensing outcomes.…”

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confidence: 99%

Experiential Learning, Bargaining Power, and Exclusivity in Technology Licensing

Khoury

Pleggenkuhle-Miles

Walter

2017

Journal of Management

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Licensing has become the central form of interfirm technology transfer and commercialization in the market for inventions. However, despite the large representation and growth of this business model, the resolution of key contractual provisions is still regarded as idiosyncratic, and little is known about how experience with prior relationships or bargaining power position affects contract outcomes. In an attempt to further understand how these transactions unfold, we present and test a theoretical framework disentangling experience benefits and transaction costs associated with licensors’ prior involvement in out- versus in-licensing deals and how they affect the important, yet contentious, contractual provision of nonexclusivity. Drawing on transaction cost, experiential learning, and bargaining power theories, we develop new insights explaining when licensors are likely to realize nonexclusive contracts as a function of their prior licensing deals, and when bargaining power moderates the relationships between prior deals and nonexclusivity. Leveraging a 27-year sample of bioscience licensing transactions, this study reveals the dynamic tension between the benefits and transaction costs arising from prior interfirm collaborations, and how a firm’s history of collaborations, alongside its bargaining power position, influences contractual outcomes.

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On the duration of technology licensing

Cited by 5 publications

References 77 publications

Bargaining and delay in patent licensing

Bargaining and delay in patent licensing

The role of short‐term contracts and subsidies in licensing

Experiential Learning, Bargaining Power, and Exclusivity in Technology Licensing

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