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Strategic Licensing And Sequential Innovations

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  • TINA KAO

Abstract

We study inventors’ strategic licensing behaviour when there are two generations of technology. The innovations are sequential, with the second invention built on the first. We show that if the market size is large and if the second innovation is relatively significant, the early inventor licenses by royalty and the second‐generation inventor licenses by a fixed fee. The results suggest that royalty licensing may be more common in industries characterized by a high degree of cumulativeness in technology. Furthermore, we observe that early inventors license by royalty payments and subsequent inventors license by fixed fees.

Suggested Citation

  • Tina Kao, 2009. "Strategic Licensing And Sequential Innovations," Manchester School, University of Manchester, vol. 77(4), pages 512-551, July.
    • Handle: RePEc:bla:manchs:v:77:y:2009:i:4:p:512-551
    DOI: 10.1111/j.1467-9957.2009.02108.x
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    1. Miyagiwa, Kaz & Ohno, Yuka, 2015. "International harmonization of the patent-issuing rules," International Journal of Industrial Organization, Elsevier, vol. 39(C), pages 81-89.

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