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Monopolistic Licensing Strategies under Asymmetric Information

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  • Schmitz, Patrick W.

Abstract

Consider a research lab that owns a patent on a new technology but cannot develop a marketable final product based on the new technology. There are two downstream firms that might successfully develop the new product. If the downstream firms' benefits from being the sole supplier of the new product are private information, the research lab will sometimes sell two licences, even though under complete information it would have sold one exclusive licence. This is in contrast to the standard result that a monopolist will sometimes serve less, but never more buyers when there is private information.

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File URL: http://mpra.ub.uni-muenchen.de/12532/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 12532.

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Date of creation: 2002
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Handle: RePEc:pra:mprapa:12532

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Related research

Keywords: Licences; Innovation; Monopoly; Private information;

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References

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  1. Werner Güth & Martin Hellwig, 1986. "The private supply of a public good," Journal of Economics, Springer, Springer, vol. 46(1), pages 121-159, December.
  2. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, Econometric Society, vol. 56(5), pages 1191-1220, September.
  3. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, Elsevier, vol. 29(2), pages 265-281, April.
  4. Kamien, Morton I. & Oren, Shmuel S. & Tauman, Yair, 1992. "Optimal licensing of cost-reducing innovation," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 483-508.
  5. Beggs, A. W., 1992. "The licensing of patents under asymmetric information," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 10(2), pages 171-191, June.
  6. Katz, Michael L & Shapiro, Carl, 1986. "How to License Intangible Property," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 101(3), pages 567-89, August.
  7. Schmitz, Patrick W, 1997. "Monopolistic Provision of Excludable Public Goods under Private Information," Public Finance = Finances publiques, , , vol. 52(1), pages 89-101.
  8. Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, Elsevier, vol. 49(2), pages 294-313, December.
  9. Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
  10. Bousquet, Alain & Cremer, Helmuth & Ivaldi, Marc & Wolkowicz, Michel, 1998. "Risk sharing in licensing," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 16(5), pages 535-554, September.
  11. ehiel, Philippe & Benny Moldovanu & Ennio Stacchetti, 1994. "How (not) to sell nuclear weapons," Discussion Paper Serie B 288, University of Bonn, Germany.
  12. Rob, Rafael, 1989. "Pollution claim settlements under private information," Journal of Economic Theory, Elsevier, Elsevier, vol. 47(2), pages 307-333, April.
  13. Kamien, Morton I. & Tauman, Yair & Zang, Israel, 1988. "Optimal license fees for a new product," Mathematical Social Sciences, Elsevier, Elsevier, vol. 16(1), pages 77-106, August.
  14. Jullien, Bruno, 1997. "Participation Constraints in Adverse Selection Models," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 67, Institut d'Économie Industrielle (IDEI), Toulouse.
  15. Ilya Segal, 1999. "Contracting With Externalities," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(2), pages 337-388, May.
  16. Kamien, Morton I., 1992. "Patent licensing," Handbook of Game Theory with Economic Applications, Elsevier, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 11, pages 331-354 Elsevier.
  17. 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.
  18. Kamien, Morton I & Tauman, Yair, 1986. "Fees versus Royalties and the Private Value of a Patent," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 101(3), pages 471-91, August.
  19. Bulow, Jeremy & Roberts, John, 1989. "The Simple Economics of Optimal Auctions," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(5), pages 1060-90, October.
  20. Katharine E. Rockett, 1990. "Choosing the Competition and Patent Licensing," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 161-171, Spring.
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Citations

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Cited by:
  1. Arijit Mukherjee, 2002. "Licensing in a Vertically Separated Industry," Keele Economics Research Papers, Centre for Economic Research, Keele University KERP 2002/09, Centre for Economic Research, Keele University.
  2. Schmitz, Patrick W., 2007. "Exclusive versus Non-exclusive Licensing Strategies and Moral Hazard," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6207, C.E.P.R. Discussion Papers.
  3. Arijit Mukherjee, 2002. "Licensing under Asymmetric information," Industrial Organization, EconWPA 0211007, EconWPA.
  4. Sen, Debapriya & Tauman, Yair, 2007. "General licensing schemes for a cost-reducing innovation," Games and Economic Behavior, Elsevier, Elsevier, vol. 59(1), pages 163-186, April.
  5. Preet S Aulakh & Marshall S Jiang & Yigang Pan, 2010. "International technology licensing: Monopoly rents, transaction costs and exclusive rights," Journal of International Business Studies, Palgrave Macmillan, vol. 41(4), pages 587-605, May.
  6. Arijit Mukherjee & Yingyi Tsai, 2013. "Technology licensing under optimal tax policy," Journal of Economics, Springer, Springer, vol. 108(3), pages 231-247, April.
  7. Козырев А.Н. & Неволин И. Ð’., 2013. "Применение Алгоритма Решения Задачи Об Оптимальном Распределении Ресурсов К Проблеме Назначения Цены За ИсÐ," Журнал Экономика и математические методы (ЭММ), Центральный Экономико-Математический Институт (ЦЭМИ), Центральный Экономико-Математический Институт (ЦЭМИ), vol. 49(3), pages 57-68, июль.

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