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Fixed-Fee Licensing of Innovations and Collusion

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  • Lin, Ping
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    Abstract

    Unlike other types of licensing agreements, such as those with output restrictions, market division clauses, or output royalties, licensing contracts with only a fixed-fee have been perceived as having no anticompetitive consequences. This paper illustrates that fixed-fee licensing may facilitate collusion by enhancing the licensee's ability to credibly punish deviations from the collusive outcome on the part of the licenser. Antitrust implications of the result and potential ways of detecting collusion-motivated licenses are discussed. Copyright 1996 by Blackwell Publishing Ltd.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Industrial Economics.

    Volume (Year): 44 (1996)
    Issue (Month): 4 (December)
    Pages: 443-49

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    Handle: RePEc:bla:jindec:v:44:y:1996:i:4:p:443-49

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    Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821

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    Cited by:
    1. X. Henry Wang & Judy Hsu, 2004. "On the Licensing of Innovations under Strategic Delegation," Working Papers 0416, Department of Economics, University of Missouri, revised 23 Dec 2004.
    2. Mottner, Sandra & Johnson, James P., 2000. "Motivations and risks in international licensing: a review and implications for licensing to transitional and emerging economies," Journal of World Business, Elsevier, vol. 35(2), pages 171-188, July.
    3. Li, Changying & Song, Juan, 2009. "Technology licensing in a vertically differentiated duopoly," Japan and the World Economy, Elsevier, vol. 21(2), pages 183-190, March.
    4. Arijit Mukherjee, 2002. "Innovation, Licensing and Welfare," Industrial Organization 0211003, EconWPA.
    5. Nisvan Erkal, 2005. "Optimal Licensing Policy in Differentiated Industries," The Economic Record, The Economic Society of Australia, vol. 81(252), pages 51-60, 03.
    6. Levy, Nadav, 2012. "Technology sharing and tacit collusion," International Journal of Industrial Organization, Elsevier, vol. 30(2), pages 204-216.
    7. YoungJun Kim & Nicholas S. Vonortas, 2006. "Determinants of technology licensing: the case of licensors," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 235-249.
    8. Li, Changying & Ji, Xiaoming, 2010. "Innovation, licensing, and price vs. quantity competition," Economic Modelling, Elsevier, vol. 27(3), pages 746-754, May.
    9. Almeida Costa, Luis & Dierickx, Ingemar, 2002. "Licensing and bundling," International Journal of Industrial Organization, Elsevier, vol. 20(2), pages 251-267, February.
    10. Luigi Filippini, 2006. "Cournot Competition in a Multiproduct Duopoly: Specialization through Licensing," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 5(3), pages 201-210, December.
    11. Kimbrough, Erik & Sheremeta, Roman, 2013. "Side-Payments and the Costs of Conflict," MPRA Paper 46808, University Library of Munich, Germany.
    12. Li, Changying & Geng, Xiaoyan, 2008. "Licensing to a durable-good monopoly," Economic Modelling, Elsevier, vol. 25(5), pages 876-884, September.
    13. Kim, YoungJun & Vonortas, Nicholas S., 2006. "Technology licensing partners," Journal of Economics and Business, Elsevier, vol. 58(4), pages 273-289.
    14. Soo Jeoung Sohn, 2006. "Choosing the partners in the licensing alliance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 251-260.
    15. Luigi Filippini, 2006. "Cournot competition among multiproduct firms:specialization through licensing," DISCE - Quaderni dell'Istituto di Teoria Economica e Metodi Quantitativi itemq0542, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    16. repec:ebl:ecbull:v:12:y:2004:i:6:p:1-10 is not listed on IDEAS

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