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The dominance of fee licensing contracts under asymmetric information signaling

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Abstract

This paper compares different licensing contracts defined by the type of payment (fees or royalties) and contract duration (short- or long-term) in a setting in which an outside patent holder that owns a patented innovation lasting for two periods licenses it to downstream Cournot firms; further, there is asymmetric information about firms' costs emerged from the use of innovation, but they are signaled through the output produced in period 1. In this context, if we concentrate on fee contracts, the patent holder prefers short-term (revealing) contracts rather than long-term contracts.

Suggested Citation

  • Manel Antelo, 2009. "The dominance of fee licensing contracts under asymmetric information signaling," Economic Working Papers at Centro de Estudios Andaluces E2009/08, Centro de Estudios Andaluces.
    • Handle: RePEc:cea:doctra:e2009_08
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    References listed on IDEAS

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    8. Anand, Bharat N & Khanna, Tarun, 2000. "The Structure of Licensing Contracts," Journal of Industrial Economics, Wiley Blackwell, vol. 48(1), pages 103-135, March.
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    Cited by:

    1. Manel Antelo, 2010. "Screening vs. signaling in technology licensing," Economic Working Papers at Centro de Estudios Andaluces E2010/05, Centro de Estudios Andaluces.

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    More about this item

    Keywords

    Licensing; signaling; fees; royalties; short- and long-term contracts; welfare;
    All these keywords.

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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