Optimal Licensing Strategy: Royalty or Fixed Fee?
AbstractLicensing a cost-reducing innovation through a royalty has been shown to be superior to licensing by means of a fixed fee for an incumbent licensor. This note shows that this result relies crucially on the assumption that the incumbent licensor can sell its cost-reducing inno-vation to all industry players. If, for any reason, only some competitors could be reached through a licensing contract, then a fixed fee might be optimally chosen.
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Bibliographic InfoArticle provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.
Volume (Year): 3 (2004)
Issue (Month): 1 (April)
licensing contract; Cournot competition; strategic effects;
Find related papers by JEL classification:
- D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Arora, Ashish & Fosfuri, Andrea, 2003.
"Licensing the market for technology,"
Open Access publications from Universidad Carlos III de Madrid
info:hdl:10016/13388, Universidad Carlos III de Madrid.
- Wang, X. Henry, 1998. "Fee versus royalty licensing in a Cournot duopoly model," Economics Letters, Elsevier, vol. 60(1), pages 55-62, July.
- Arijit Mukherjee & Yingyi Tsai, 2013. "Technology licensing under optimal tax policy," Journal of Economics, Springer, vol. 108(3), pages 231-247, April.
- Stefano Colombo & Luigi Filippini, 2013. "Fee versus royalty licensing in a Cournot duopoly model with a commitment of no production," Economics Bulletin, AccessEcon, vol. 33(3), pages 2122-2128.
- Ming-Chung Chang, 2010. "Insider patent holder licensing in an oligopoly market with different cost structures: Fixed-fee, royalty, and auction," Economics Bulletin, AccessEcon, vol. 30(1), pages 20-31.
- Peter Dawson, 2013. "Royalty Rate Determination," Alumni working papers 2013-03, University of Connecticut, Department of Economics.
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