Social Optimal Licensing of Innovations
AbstractA profit-maximizing monopolist licenses a cost-reducing innovation to downstream firms that compete strategically. Katz and Shapiro (1986) find the seemingly obvious result that "the [monopolist's] incentive to disseminate the innovation typically are too low." Instead, the author finds that the incentives are typically too high. Only if the lab is owned by more than half of the firms and does not disseminate the innovation to all member, would the incentives always be too low. Social incentives can be less than the private incentives for even one license. These changes come from relaxing previous authors' assumption that it is cost-less to install the innovation.
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Bibliographic InfoPaper provided by Michigan State - Econometrics and Economic Theory in its series Papers with number 9803.
Length: 24 pages
Date of creation: 1998
Date of revision:
Contact details of provider:
Postal: MICHIGAN STATE UNIVERSITY, DEPARTMENT OF ECONOMICS, EAST LANSING MICHIGAN 48824 U.S.A.
Web page: http://econ.msu.edu/
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OPTIMUM CHOICE ; INNOVATIONS ; LICENCES;
Find related papers by JEL classification:
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
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