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Licensing a new product: Fee vs. royalty licensing with unionized labor market

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  • Mukherjee, Arijit

Abstract

In an economy with unionized labor market, we show that the payoff of an outside innovator may be higher under royalty licensing than under fixed-fee licensing and auction, if bargaining power of the labor union is sufficiently high. This result holds for both decentralized and centralized bargaining. It follows from our analysis that a combination of fixed-fee and output royalty can be preferable to the innovator compared to both royalty only licensing and auction (or fixed-fee licensing). We discuss the implications of positive opportunity costs of the licensees.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 17 (2010)
Issue (Month): 4 (August)
Pages: 735-742

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Handle: RePEc:eee:labeco:v:17:y:2010:i:4:p:735-742

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

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Keywords: Auction Fixed-fee Labor union Licensing Royalty;

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References

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Cited by:
  1. Mukherjee, Arijit, 2013. "Endogenous domestic market structure and the effects of a trade cost reduction in a unionised industry," Economic Modelling, Elsevier, vol. 32(C), pages 30-33.
  2. Bagchi, Aniruddha & Mukherjee, Arijit, 2014. "Technology licensing in a differentiated oligopoly," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 455-465.

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