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Selling patent rights and the incentive to innovate

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  • Tauman, Yair
  • Weng, Ming-Hung
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    Abstract

    We show that an outside innovator has a higher incentive to innovate than an incumbent innovator, by auctioning off his patent rights exclusively to an incumbent firm. For significant innovations this is also superior to selling licenses directly.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0165176511004034
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    Bibliographic Info

    Article provided by Elsevier in its journal Economics Letters.

    Volume (Year): 114 (2012)
    Issue (Month): 3 ()
    Pages: 241-244

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    Handle: RePEc:eee:ecolet:v:114:y:2012:i:3:p:241-244

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    Web page: http://www.elsevier.com/locate/ecolet

    Related research

    Keywords: Patent licensing; Cournot oligopoly; Process innovation; Patent rights; Incentive to innovate;

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    References

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    1. Kamien, Morton I., 1992. "Patent licensing," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 11, pages 331-354 Elsevier.
    2. Kamien, Morton I. & Oren, Shmuel S. & Tauman, Yair, 1992. "Optimal licensing of cost-reducing innovation," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 483-508.
    3. Kamien, Morton I & Tauman, Yair, 2002. "Patent Licensing: The Inside Story," Manchester School, University of Manchester, vol. 70(1), pages 7-15, January.
    4. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
    5. Katz, Michael L & Shapiro, Carl, 1986. "How to License Intangible Property," The Quarterly Journal of Economics, MIT Press, vol. 101(3), pages 567-89, August.
    6. Kamien, Morton I & Tauman, Yair, 1986. "Fees versus Royalties and the Private Value of a Patent," The Quarterly Journal of Economics, MIT Press, vol. 101(3), pages 471-91, August.
    7. Debapriya Sen & Yair Tauman, 2002. "General licensing schemes for a cost-reducing innovation," Department of Economics Working Papers 02-03, Stony Brook University, Department of Economics.
    8. Wang, X. Henry, 1998. "Fee versus royalty licensing in a Cournot duopoly model," Economics Letters, Elsevier, vol. 60(1), pages 55-62, July.
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    Cited by:
    1. Yair Tauman & Debrapiya Sen, 2012. "Patents and Licenses," Department of Economics Working Papers 12-05, Stony Brook University, Department of Economics.
    2. BHATTACHARYA, Sudipto & D’ASPREMONT, Claude & GURIEV, Sergei & SEN, Debapriya, 2012. "Cooperation in R&D: patenting, licensing and contracting," CORE Discussion Papers 2012055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Weng, Ming-Hung, 2012. "Demand structure and the incentive to innovate," Mathematical Social Sciences, Elsevier, vol. 63(3), pages 248-251.
    4. Stefano Colombo & Luigi Filippini, 2012. "Patent licensing with Bertrand competitors," DISCE - Quaderni dell'Istituto di Teoria Economica e Metodi Quantitativi itemq1262, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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