Technology Transfer in a Stackelberg Structure: Licensing Contracts and Welfare

Kabiraj, Tarun

doi:10.1111/j.1467-9957.2005.00421.x

Cited by 53 publications

(54 citation statements)

References 16 publications

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“…In a Stackelberg structure, Kabiraj (2005) studies licensing contracts and welfare, and Wang and Yang (2004) deal with incentives and gains from an innovation when licensing is possible. However, they impose the constraint that the royalty rate cannot exceed the cost reduction.…”

Section: Introductionmentioning

confidence: 99%

Licensing Contract in a Stackelberg Model*

Filippini

2005

Manchester School

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We study optimal linear licensing and its social welfare implications when the innovator (patentee) is an insider that can make capacity/output commitment so as to act as a Stackelberg leader in the output market. We show that (i) the patentee's profit-maximizing licensing contract is a royalty; (ii) the optimal royalty rate is greater than the cost reduction attained by the licensed technology and is increasing in the number of competitors; (iii) optimal licensing maximizes the likelihood of technology transfer, may reduce social welfare and always makes consumers worse off; and (iv) the innovator benefits from capacity commitment, and the more competitive the output market, the greater the gains it makes by licensing. The opposite holds for consumers.

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Section: Introductionmentioning

confidence: 99%

Licensing Contract in a Stackelberg Model*

Filippini

2005

Manchester School

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“…Comparing licensing by means of upfront fees (which may be collected via an auction) and royalties, the early literature concluded that licensing by means of upfront fees dominates royalty licensing for an outside innovator (Kamien & Tauman, 1984;Kamien & Tauman, 1986;Kamien, et al, 1992). As royalties are frequently observed in practice, the conclusion on the suboptimality of royalty licensing generated a number of papers that argued that royalties can be explained by factors, such as informational asymmetry (Gallini & Wright, 1990;Rockett, 1990;Sen, 2005a), product differentiation (Muto, 1993;Wang & Yang, 1999;Poddar & Sinha, 2004), leadership structure (Kabiraj, 2004;Kabiraj, 2005;Filippini, 2005), or by the fact that the number of licenses must be an integer (Sen, 2005b). There is a small literature that considers issues of international trade in the context of technology transfer.…”

Section: Introductionmentioning

confidence: 99%

Entry and technology transfer in a Cournot model

2010

CBR

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This work studies entry and technology transfer in a Cournot model where there are two domestic firms. A foreign firm has a patent on a technological innovation that reduces the costs of all firms. The foreign firm can license the innovation to one or both domestic firms. The authors consider two standard licensing policies: (1) auction policy and (2) unit royalty policy. The foreign firm can license the innovation either by staying outside the domestic market, or it can enter the market, license the innovation and compete with the domestic firms. The authors show that (1) when the foreign firm stays outside, it is never optimal for it to use royalties, (2) if it licenses the innovation by entering the industry, then royalties could be optimal and (3) when it decides on its entry strategy by taking its optimal licensing policies into account, it always finds it optimal to enter the domestic market.

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“…Kamien and Tauman (1986) shows that if the licensor lacks production capacity, a fixed fee is better than a royalty, and is also better for consumers. This topic is addressed under Stackelberg oligopoly both when a licensor has production capacity (Wang and Yang (2004); Kabiraj (2005);Filippini (2005)) and when it lacks production capacity (Kabiraj (2004)). La Manna (1993) analyzes a Cournot oligopoly with a fixed fee under cost asymmetry, and shows that if technologies can be replicated perfectly, a lower-cost firm always has an incentive to transfer its technology.…”

Section: Related Literaturementioning

confidence: 99%

Subsidizing New Technology Adoption in a Stackelberg Duopoly: Cases of Substitutes and Complements

Hattori

Tanaka

2016

Ital Econ J

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Economic growth requires that firms adopt new technologies. However, it may be insufficient in less competitive industries from the social welfare point of view. In this case, a government subsidy is necessary. We present an analysis of firms' adoption of new technology and government subsidization policy in a Stackelberg duopoly with differentiated goods. The technology itself is free, but each firm must expend a fixed set-up cost, such as training employees. There are several cases related to optimal policies depending on the set-up costs and whether the goods are substitutes or complements. In particular, there are two cases.1. Social welfare is maximized when only the Stackelberg leader adopts the new technology, but no firm adopts the new technology without a subsidy. Then, the government should subsidize only the leader, which is a discriminatory policy. (Case 5 of Theorem 1 and Case 3-(1)-ii of Theorem 2) 2. Social welfare is maximized when both firms adopt the new technology, but only the leader adopts the new technology without a subsidy. Then, the government should subsidize only the follower. This policy is not discriminatory because adoption is the dominant strategy for the leader. (Case 2 of Theorem 1)

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Technology Transfer in a Stackelberg Structure: Licensing Contracts and Welfare

Cited by 53 publications

References 16 publications

Licensing Contract in a Stackelberg Model*

Licensing Contract in a Stackelberg Model*

Entry and technology transfer in a Cournot model

Subsidizing New Technology Adoption in a Stackelberg Duopoly: Cases of Substitutes and Complements

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