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Optimal Licensing in a Spatial Model


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  • Francisco CABALLERO-SANZ


We analyze a multi-stage non-cooperative game involving an outside patent-holder, who seeks to licence a process innovation, and two price-setting firms located on a circumference. Three licensing policies are studied: the auction, the fixed fee and the per unit output royalty. The main finding is that, contrary to standard results, royalties yield higher payoffs to the patent-holder than do an auction policy or a fixed fee policy regardless of the size of the innovation. Besides, a conflict between private and social interests arises since consumers are better off when the technology is licensed via fees.

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Bibliographic Info

Article provided by ENSAE in its journal Annals of Economics and Statistics.

Volume (Year): (2002)
Issue (Month): 66 ()
Pages: 257-279

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Handle: RePEc:adr:anecst:y:2002:i:66:p:11

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Cited by:
  1. Ménière, Yann & Parlane, Sarah, 2008. "Decentralized of licensing of complementary patents: comparing royalty, fixed fee and two part tariff," PIE/CIS Discussion Paper 383, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  2. MAULEON, Ana & VANNETELBOSCH, Vincent & VERGARI, Cecilia, 2010. "Bargaining and delay in patent licensing," CORE Discussion Papers 2010077, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. repec:hal:wpaper:halshs-00847955 is not listed on IDEAS
  4. repec:hal:cesptp:halshs-00847955 is not listed on IDEAS


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