The dominance of fee licensing contracts under asymmetric information signaling
AbstractThis 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.
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Bibliographic InfoPaper provided by Centro de Estudios Andaluces in its series Economic Working Papers at Centro de Estudios Andaluces with number E2009/08.
Length: 37 pages
Date of creation: 2009
Date of revision:
Licensing; signaling; fees; royalties; short- and long-term contracts; welfare;
Find related papers by JEL classification:
- D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-01-16 (All new papers)
- NEP-CTA-2010-01-16 (Contract Theory & Applications)
- NEP-INO-2010-01-16 (Innovation)
- NEP-IPR-2010-01-16 (Intellectual Property Rights)
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