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Free Licensing in a Differentiated Duopoly

Author

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  • Kabiraj, Tarun
  • Chatterjee, Rittwik
  • Chattopadhyay, Srobonti

Abstract

The present paper discusses the possibility of free licensing in a model of differentiated duopoly. We have shown that given the market size, the degree of product differentiation and the unit cost of input production, free licensing will occur if the transferred technology is not much superior and the market price of input is sufficiently large. If, however, any of market size, input cost or product substitution goes up, the possibility of free licensing will fall. Our result has an important implication in the context of transboundary pollution. The overall welfare under free licensing will be higher unambiguously.

Suggested Citation

  • Kabiraj, Tarun & Chatterjee, Rittwik & Chattopadhyay, Srobonti, 2020. "Free Licensing in a Differentiated Duopoly," MPRA Paper 101984, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:101984
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    References listed on IDEAS

    as
    1. X. H. Wang & Bill Z. Yang, 1999. "On Licensing Under Bertrand Competition," Australian Economic Papers, Wiley Blackwell, vol. 38(2), pages 106-119, June.
    2. Kathleen R. Conner, 1995. "Obtaining Strategic Advantage from Being Imitated: When Can Encouraging "Clones" Pay?," Management Science, INFORMS, vol. 41(2), pages 209-225, February.
    3. Mukherjee, Arijit & Balasubramanian, N., 2001. "Technology transfer in a horizontally differentiated product market," Research in Economics, Elsevier, vol. 55(3), pages 257-274, September.
    4. Sen, Debapriya & Tauman, Yair, 2007. "General licensing schemes for a cost-reducing innovation," Games and Economic Behavior, Elsevier, vol. 59(1), pages 163-186, April.
    5. Can Erutku & Yves Richelle, 2007. "Optimal Licensing Contracts and the Value of a Patent," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(2), pages 407-436, June.
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    7. Henry Wang, X., 2002. "Fee versus royalty licensing in a differentiated Cournot duopoly," Journal of Economics and Business, Elsevier, vol. 54(2), pages 253-266.
    8. Bagchi, Aniruddha & Mukherjee, Arijit, 2014. "Technology licensing in a differentiated oligopoly," International Review of Economics & Finance, Elsevier, vol. 29(C), pages 455-465.
    9. Sinha, Uday Bhanu, 2016. "Optimal value of a patent in an asymmetric Cournot duopoly market," Economic Modelling, Elsevier, vol. 57(C), pages 93-105.
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    11. Wang, X Henry & Yang, Bill Z, 1999. "On Licensing under Bertrand Competition," Australian Economic Papers, Wiley Blackwell, vol. 38(2), pages 106-119, June.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Transferred technology; free licensing; product differentiation; input price; cross-border pollution.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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