A Macroeconomic Model of Imperfect Competition with Patent Licensing
AbstractThis paper sets up an imperfectly competitive macroeconomic model that features the strategic interaction between the patent-holding firm and licensees, and uses it to analyze the relevant macro variables under various licensing arrangements. Some main findings emerge from the analysis. First, the equilibrium aggregate output and aggregate consumption under fixed-fee and royalty licensing regimes are always greater than those under the no licensing regime. Moreover, the equilibrium aggregate output and consumption under the fixed-fee licensing regime are always greater than those under the royalty licensing regime. Second, with the higher (lower) technology level the patent-holder prefers the fixed-fee (royalty) contract. Third, welfare could be improved through technology transfer, and the level of welfare under the fixed-fee licensing regime is higher than that under the royalty licensing regime.
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Bibliographic InfoPaper provided by Institute of Economics, Academia Sinica, Taipei, Taiwan in its series IEAS Working Paper : academic research with number 13-A007.
Length: 33 pages
Date of creation: Aug 2013
Date of revision:
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Web page: http://www.econ.sinica.edu.tw/index.php?foreLang=en
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Imperfect competition; Macroeconomic model; Fixed-fee licensing; Royalty licensing;
Find related papers by JEL classification:
- D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
- E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-08-23 (All new papers)
- NEP-COM-2013-08-23 (Industrial Competition)
- NEP-INO-2013-08-23 (Innovation)
- NEP-IPR-2013-08-23 (Intellectual Property Rights)
- NEP-MAC-2013-08-23 (Macroeconomics)
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