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Tariff Induced Fee Licensing and Consumers’ Welfare

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  • Kabiraj, Tarun

Abstract

In a Cournot duopoly with one foreign firm and one domestic firm we show that a tariff on foreign products can be an effective instrument to influence the licensing strategy of the foreign firm. Under free trade technology transfer occurs with a royalty contract, but a suitably designed tariff rate can induce the foreign firm transfer its superior technology to the domestic firm under the fee contract where consumers’ welfare is maximized and social welfare is larger. Such a policy appears to be catchy from the viewpoint of a political party in power

Suggested Citation

  • Kabiraj, Tarun, 2012. "Tariff Induced Fee Licensing and Consumers’ Welfare," MPRA Paper 59256, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:59256
    as

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    References listed on IDEAS

    as
    1. Fauli-Oller, Ramon & Sandonis, Joel, 2002. "Welfare reducing licensing," Games and Economic Behavior, Elsevier, vol. 41(2), pages 192-205, November.
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    6. Kabiraj, Tarun & Marjit, Sugata, 2003. "Protecting consumers through protection: The role of tariff-induced technology transfer," European Economic Review, Elsevier, vol. 47(1), pages 113-124, February.
    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.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Tariffs; Fee licensing; Royalty licensing; Consumers’ welfare;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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