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Free licensing strategy and ex-post privatization policy with passive ownership

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  • Cho, Sumi
  • Kim, Doori
  • Lee, Sang-Ho

Abstract

This study considers a free licensing strategy with passive ownership and investigates the interaction with ex-post privatization policy in a mixed oligopoly where free licensing can be announced before the government selects its optimal degree of privatization. We examine and compare foreign and public licensors and explore the relationships between the foreign share of passive ownership in domestic firms and the incentive of free licensing strategies. We show that free licensing strategies always yield more privatization and higher welfare. By contrast, free licensing between the foreign and public licensors depends on the share of passive ownership and technology gap. We further consider open technology and fee licensing strategies and provide contrasting findings on the optimal degree of privatization and welfare consequences.

Suggested Citation

  • Cho, Sumi & Kim, Doori & Lee, Sang-Ho, 2022. "Free licensing strategy and ex-post privatization policy with passive ownership," Economic Modelling, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:ecmode:v:106:y:2022:i:c:s0264999321002650
    DOI: 10.1016/j.econmod.2021.105676
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    Cited by:

    1. Madhuri H.Shastry & Uday Bhanu Sinha, 2023. "Privatization and Licensing under Public Budget Constraint," Working papers 343, Centre for Development Economics, Delhi School of Economics.
    2. Xu, Lili & Matsumura, Toshihiro, 2023. "Market transparency in a mixed oligopoly," MPRA Paper 118415, University Library of Munich, Germany.
    3. Chuyuan Zhang & Sang‐Ho Lee, 2023. "Foreign passive ownership and tariff‐induced free technology transfer under vertical integration," Manchester School, University of Manchester, vol. 91(2), pages 89-117, March.

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    More about this item

    Keywords

    Free licensing; Foreign licensing; Public licensing; Passive ownership; Ex post privatization; Open technology; Fee licensing;
    All these keywords.

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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