Revenue royalties

Colombo, Stefano; Filippini, Luigi

doi:10.1007/s00712-015-0459-z

Cited by 27 publications

(21 citation statements)

References 35 publications

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“…Other works on a two-part ad valorem royalty mechanism include Heywood et al (2014), Colombo and Filippini (2015), and San Martín and Saracho (2015). While these papers assume constant returns to scale, Colombo and Filippini (2016) compared several licensing mechanisms -ad valorem royalty, per-unit royalty and revenue-royalty -under the assumption of decreasing returns to scale in a Cournot duopoly. 4 An early work by San Martín and Saracho (2010) showed that ad valorem royalty licensing is superior to per-unit royalty licensing.…”

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confidence: 99%

Ad Valorem Versus Per‐unit Royalty Licensing in a Cournot Duopoly Model

Hsu

Liu

Wang

et al. 2019

The Manchester School

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Ad valorem royalty licensing is implemented when the licensor (i.e., patent‐holding firm) obtains ownership shares in the licensee as payment once the new technology is transferred. In a Cournot duopoly model, we compare two licensing forms between competitors of different productivity, ad valorem and per‐unit royalty licensing. This paper finds that ad valorem royalty licensing is superior to per‐unit royalty licensing for the patent‐holding firm when the cost‐reducing innovation is non‐drastic. The reason for this result is that cross ownership reduces output market competition and thus the patent‐holding firm enjoys better profit margins by strategically setting the share ratio. Furthermore, we show that the relieved competition under ad valorem royalty licensing pulls down the industry output, and thus hurts consumer surplus and social welfare in comparison to per‐unit royalty licensing.

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confidence: 99%

Ad Valorem Versus Per‐unit Royalty Licensing in a Cournot Duopoly Model

Hsu

Liu

Wang

et al. 2019

The Manchester School

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“…We use the strength of domestic patenting systems in the licensee country 19 This is evident from the unambiguously negative impact on licensor's output of a lax domestic IPRs system, i.e., 0 ) ( 9 For the possible avenue of future research, it is worth emphasizing that interesting insights can be provided to the extant literature as to whether quality choice of the licensed technology can be functioned as a cost-reducing technology 20 or whether new result can be obtained if it is alternatively formulated as a demand enhancing element 21 , despite that royalties is not directly associated with price in Colombo and Filippini (2016) and our paper focuses on the endogenous quality choice for any given strength of the domestic IPRs system.…”

Section: Resultsmentioning

confidence: 99%

“…We investigate the role that per unit royalty 5 plays, in particular, under weak domestic patenting regime in facilitating the endogenous choice of an exact quality level of foreign licensed technology (cf. Vishwasrao, 2007;Amir et al, 2011;Colombo and Filippini, 2016). This paper, however, is not the first to explore the quality of licensed technology in a licensing agreement.…”

Section: Multinationals Trade In Intermediate Inputs (The Us Bureaumentioning

confidence: 95%

“…And Amir et al (2011) examine licensing schemes in a weak patent system when a patent might be invalidated if challenged in court. 5 In an interesting contribution, Colombo and Filippini (2016) study different licensing schemes and compare two-part tariff to both schemes of ad valorem royalty contracts and revenue-royalty contracts, where the price, rather than the quantity, is the basis of the licensing contract. 6 The authors thank an anonymous referee for suggesting a clarification on the linkage between quality choice and cost-reducing technology.…”

Section: Multinationals Trade In Intermediate Inputs (The Us Bureaumentioning

confidence: 99%

“…67-8). (2016), we note the following differences: foreign licensor solely incurs the cost of technology transfer, which is an efficiency-adjusted (quadratic) function of technology quality (s), while technology transfer in Colombo and Filippini (2016) relates directly with total output (p. 50). In line with the interpretation of  in the present model, if we interpret the technology parameter k in Colombo and Filippini (2016, pp.…”

Section: Fixed-fee Licensing Under Wp and Spmentioning

confidence: 99%

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Domestic patenting systems and foreign licensing choices

Tsai

Mukherjee

2017

J. Econ.

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Abstract. This paper examines a foreign technology holder's licensing choices between royalty and fixed-fee scheme. We emphasize that foreign licensor chooses the quality of licensed technology when the licensee country does not implement perfect intellectual property protection for licensor's technology. We study quality choice as the foreign licensor's selection for a particular grade of technical skills. We show that fixed fee emerges as the equilibrium licensing scheme when both the transfer of his technology is relatively efficient and the licensee is sufficiently cost competitive in the domestic market, and that royalty licensing prevails otherwise. We further show it need not hold the general belief that welfare in the licensor country unambiguously rise with a stronger patenting system in the licensee country when, in particular, such patenting system in place is sufficiently lax.

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