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The real price of intellectual property: evaluation of franchisees’ benefits

Author

Listed:
  • Ivan Kotliarov

    (National Research University, Higher School of Economics, 55 ulitsa Sedova, St. Petersburg 193171, Russia)

Abstract

It is demonstrated that models of royalty rate calculations developed for licensing should not be applied to franchising because the benefits received by a licensee and a franchisee are different. It is proposed that the risk reduction generated by the franchisor’s effective technologies and the managerial support given to a franchisee also be included in the model of royalty calculation. It is demonstrated that a franchisee may wish to acquire the franchise even if the franchisor takes the full amount of additional income or if this additional income is negative.

Suggested Citation

  • Ivan Kotliarov, 2013. "The real price of intellectual property: evaluation of franchisees’ benefits," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 63(1), pages 43-60, March.
    • Handle: RePEc:aka:aoecon:v:63:y:2013:i:1:p:43-60
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    More about this item

    Keywords

    royalty; royalty rate; franchising; franchisee; franchisor; risk; income;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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