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Fee versus royalty licensing in spatial Cournot competition

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  • Stefano Colombo

Abstract

This article investigates the optimal licensing mechanism in a spatial model where competitors set quantities and one firm owns a cost-reducing innovation. We show that when the firms spatially discriminate, the innovator gets higher profits by licensing through royalties instead than through a fixed fee, whereas in the case of uniform delivered quantities, the innovator prefers licensing by royalties (fixed fee) if and only if it has not (has) a sufficiently strong locational disadvantage with respect to the potential licensee. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Stefano Colombo, 2014. "Fee versus royalty licensing in spatial Cournot competition," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(3), pages 859-879, May.
    • Handle: RePEc:spr:anresc:v:52:y:2014:i:3:p:859-879
    DOI: 10.1007/s00168-014-0614-4
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    Cited by:

    1. John Heywood & Zheng Wang, 2015. "How to license a transport innovation," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(2), pages 485-500, December.
    2. Kuang-Cheng Andy Wang & Yi-Jie Wang & Wen-Jung Liang & Chao-Cheng Mai, 2017. "Optimal licensing with equity," Papers in Regional Science, Wiley Blackwell, vol. 96, pages 207-220, March.
    3. Stefano Colombo, 2016. "A Model of Three Cities," International Regional Science Review, , vol. 39(4), pages 386-416, October.

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    More about this item

    Keywords

    D45; R10;

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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