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Patent Licensing from High-Cost Firm to Low-Cost Firm

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Author Info
Sougata Poddar () (National University of Singapore)
Uday Bhanu Sinha () (Indian Statistical Institute)

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Abstract

In the literature of patent licensing, most of the studies are done where new technology is transferred from a cost-efficient firm (patentee) to a less efficient firm (licensee). However, R&D intensive firms are usually based in high wage countries whereas the cost-efficient firms are based in low wage countries. As a result R&D intensive firms are not necessarily the most cost -efficient firms in the industry, although in most cases they are the patentee firms. Given this backdrop, we study a situation of patent licensing where the technology transfer takes place from an innovative firm, which is relatively inefficient in terms of cost of production to its cost-efficient rival. We look for optimal licensing arrangements in this environment. This framework also provides a platform to bridge the literature on external and internal patentees.

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File URL: http://www.fas.nus.edu.sg/ecs/pub/wp/wp0503.pdf
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Paper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0503.

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Date of creation: 2005
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Handle: RePEc:nus:nusewp:wp0503

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Related research
Keywords: licensing; fixed fee; royalty; two-part tariff; quantity competition; Innovation;

Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Nancy T. Gallini & Brian D. Wright, 1990. "Technology Transfer under Asymmetric Information," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 147-160, Spring. [Downloadable!] (restricted)
  2. Choi, Jay Pil, 2001. "Technology transfer with moral hazard," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 249-266, January. [Downloadable!] (restricted)
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  3. Caves, Richard E & Crookell, Harold & Killing, J Peter, 1983. "The Imperfect Market for Technology Licenses," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 45(3), pages 249-67, August.
  4. Kamien, Morton I., 1992. "Patent licensing," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 11, pages 331-354 Elsevier. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Arijit Mukherjee, 2007. "Optimal licensing contract in an open economy," Economics Bulletin, Economics Bulletin, vol. 12(3), pages 1-6. [Downloadable!]
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