On the superiority of fixed fee over auction in asymmetric markets
AbstractIt is well known that selling licenses for the use of a cost-reducing innovation by auction yields a higher revenue compared to fixed fee in a symmetric Cournot industry. In this note we show that this result can be reversed in an asymmetric Cournot industry, i.e., the fixed fee policy can generate a strictly higher revenue than the auction policy in an industry where prior to the innovation firms are cost-asymmetric.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 67 (2009)
Issue (Month): 1 (September)
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Web page: http://www.elsevier.com/locate/inca/622836
Cost-reducing innovation Asymmetric firms Fixed fee Auction;
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