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Licensees as Entry Barriers

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  • Mukesh Eswaran

Abstract

In a more general setting than has been considered hitherto, this paper examines how the incumbent in a market threatened by entry can exploit its first-mover advantage by licensing its technology not to a potential entrant but to firms that would have remained outside the industry. It is shown, among other things, that the incumbent may subsidize the variable costs of its licensees in order to deter entry. Even when entry is not deterred, it is demonstrated that the incumbent might opt to invite outsiders as licensees.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 27 (1994)
Issue (Month): 3 (August)
Pages: 673-88

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Handle: RePEc:cje:issued:v:27:y:1994:i:3:p:673-88

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Citations

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Cited by:
  1. Eiji Horiuchi & Jota Ishikawa, 2007. "Tariffs and Technology Transfer through an Intermediate Product," Discussion Papers 2007-15, School of Economics, The University of New South Wales.
  2. Aidan Hollis, 2002. "Strategic Implications of Learning by Doing," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(2), pages 157-174.
  3. Preet S Aulakh & Marshall S Jiang & Yigang Pan, 2010. "International technology licensing: Monopoly rents, transaction costs and exclusive rights," Journal of International Business Studies, Palgrave Macmillan, vol. 41(4), pages 587-605, May.
  4. Yi, Sang-Seung, 1999. "Entry, licensing and research joint ventures," International Journal of Industrial Organization, Elsevier, vol. 17(1), pages 1-24, January.
  5. Aidan Hollis, 1996. "Subsidizing the Competition," Working Papers ecpap-96-02, University of Toronto, Department of Economics.
  6. Kim, YoungJun & Vonortas, Nicholas S., 2006. "Technology licensing partners," Journal of Economics and Business, Elsevier, vol. 58(4), pages 273-289.
  7. repec:ebl:ecbull:v:12:y:2004:i:6:p:1-10 is not listed on IDEAS
  8. 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.
  9. Laura Magazzini & Fabio Pammolli & Massimo Riccaboni, 2004. "Dynamic competition in pharmaceuticals," The European Journal of Health Economics, Springer, vol. 5(2), pages 175-182, May.
  10. Arijit Mukherjee, 2014. "Licensing under convex costs," Journal of Economics, Springer, vol. 111(3), pages 289-299, April.
  11. Aidan Hollis, 2003. "The Anti-Competitive Effects of Brand-Controlled "Pseudo- Generics" in the Canadian Pharmaceutical Market," Canadian Public Policy, University of Toronto Press, vol. 29(1), pages 21-31, March.
  12. Nisvan Erkal, 2004. "Optimal Licensing Policy in Differentiated Industries," Department of Economics - Working Papers Series 894, The University of Melbourne.
  13. 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.
  14. 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.
  15. Laura Magazzini & Fabio Pammolli & Gianluca Papa & Nicola Carmine Salerno, 2005. "Generici vs. Branded: confronto internazionale su prodotti off-patent rimborsati dal SSN," Working Papers 01-2005, Competitività Regole Mecati (CERM).

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