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Profit-sharing licensing

Author

Listed:
  • Shuai Niu

    (Shandong University)

Abstract

Profit-sharing licensing is quite a common business practice. In a Cournot duopoly model, we showed that if not subject to any restrictions this kind of technology for equity deal would lead to a decline in industry output and hurt consumers. To avoid the industry output contraction and protect the interests of consumers, the government can intervene in licensing by requiring that the profit-sharing rate specified by a licensing contract should not exceed the percentage difference of involved firms’ equilibrium outputs before licensing.

Suggested Citation

  • Shuai Niu, 2017. "Profit-sharing licensing," Journal of Economics, Springer, vol. 121(3), pages 267-278, July.
  • Handle: RePEc:kap:jeczfn:v:121:y:2017:i:3:d:10.1007_s00712-017-0528-6
    DOI: 10.1007/s00712-017-0528-6
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    References listed on IDEAS

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    Cited by:

    1. Leonard F. S. Wang & Arijit Mukherjee & Chenhang Zeng, 2020. "Does technology licensing matter for privatization?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1462-1480, September.
    2. Stefano Colombo & Siyu Ma & Debapriya Sen & Yair Tauman, 2021. "Equivalence between fixed fee and ad valorem profit royalty," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(5), pages 1052-1073, October.
    3. John S. Heywood & Lu Xu & Guangliang Ye, 2019. "How does a public innovator license a foreign rival?," Australian Economic Papers, Wiley Blackwell, vol. 58(1), pages 78-95, March.
    4. Cho, Sumi & Kim, Doori & Lee, Sang-Ho, 2021. "Free licensing strategy and ex post privatization in a mixed oligopoly," MPRA Paper 106126, University Library of Munich, Germany.
    5. 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).
    6. Antelo, Manel & Bru, Lluís, 2023. "Licensing a product innovation in a Cournot industry," MPRA Paper 116631, University Library of Munich, Germany.
    7. Shin Kishimoto, 2020. "The welfare effect of bargaining power in the licensing of a cost-reducing technology," Journal of Economics, Springer, vol. 129(2), pages 173-193, March.

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    More about this item

    Keywords

    Technology; Equity; Licensing; Welfare; Policy;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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