Royalty licensing

Martín, Marta San; Saracho, Ana I.

doi:10.1016/j.econlet.2010.02.010

Cited by 72 publications

(40 citation statements)

References 15 publications

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“…But the analysis was conducted with linear demand and zero marginal costs with the innovation. This paper departs from San Martín and Saracho () in two ways. Firstly, we generalize the result to the case of demands with decreasing marginal revenue.…”

Section: Introductionmentioning

confidence: 84%

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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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Section: Introductionmentioning

confidence: 84%

“…An early work by San Martín and Saracho () showed that ad valorem royalty licensing is superior to per‐unit royalty licensing. But the analysis was conducted with linear demand and zero marginal costs with the innovation.…”

Section: Introductionmentioning

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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“…12 This result is in contrast with a process innovation (Muto, 1993). Remaining equilibrium variables are:…”

Section: Bertrand Competitionmentioning

confidence: 82%

Product Innovation in a Vertically Differentiated Model

Filippini

Vergari

2012

SSRN Journal

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We study the licensing incentives of an independent input producer owning a patented product innovation which allows the downstream …rms to improve the quality of their …nal goods. We consider a general two-part tari¤ contract for both outside and incumbent innovators. We …nd that technology di¤ usion critically depends on the nature of market competition (Cournot vs. Bertrand). Moreover, the vertical merger with either downstream …rm is always privately pro…table and it is welfare improving for large innovations: this implies that not all pro…table mergers should be rejected.

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“…In contrast, when the constraint is binding under either license or no-license or under both cases (areas A, B and C), we have different results. ad valorem royalties (San Martín and Saracho, 2010;Colombo and Filippini, forthcoming;Heywood et al, 2014).…”

Section: Discussionmentioning

confidence: 99%