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Licensing and the Incentive for Innovation

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Author Info

  • Arijit Mukherjee

    (Keele University)

  • Soma Mukherjee

    (Keele University)

Abstract

Previous literature has mostly considered R&D and licensing activities separately. In this paper we examine the effect of licensing on R&D and social welfare. We show that the effect of licensing on the incentive for doing R&D is ambiguous and depends on the costs of doing R&D. We also show that the possibility of licensing can change the identity of the innovating firm. However, we find that social welfare is non- decreasing in presence of licensing.

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File URL: http://128.118.178.162/eps/io/papers/0211/0211008.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0211008.

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Length: 23 pages
Date of creation: 05 Nov 2002
Date of revision:
Handle: RePEc:wpa:wuwpio:0211008

Note: Type of Document - pdf; prepared on pc; pages: 23
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Web page: http://128.118.178.162

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Keywords: Licensing; R&D; Welfare;

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References

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  1. Mukhopadhyay, Sankar & Kabiraj, Tarun & Mukherjee, Arijit, 1999. "Technology transfer in duopoly The role of cost asymmetry," International Review of Economics & Finance, Elsevier, vol. 8(4), pages 363-374, November.
  2. Tarun Kabiraj & Arijit Mukherjee, 2000. "Cooperation in R&D and production: a three-firm analysis," Journal of Economics, Springer, vol. 71(3), pages 281-304, October.
  3. Suzumura, Kotaro, 1992. "Cooperative and Noncooperative R&D in an Oligopoly with Spillovers," American Economic Review, American Economic Association, vol. 82(5), pages 1307-20, December.
  4. Gallini, Nancy T, 1984. "Deterrence by Market Sharing: A Strategic Incentive for Licensing," American Economic Review, American Economic Association, vol. 74(5), pages 931-41, December.
  5. Bester, H. & Petrakis, E., 1991. "The Incentives for Cost Reduction in a Differentiated Industry," Discussion Paper 1991-36, Tilburg University, Center for Economic Research.
  6. Salant, Stephen W, 1984. "Preemptive Patenting and the Persistence of Monopoly: Comment," American Economic Review, American Economic Association, vol. 74(1), pages 247-50, March.
  7. Jeroen Hinloopen, 1997. "Subsidizing cooperative and noncooperative R&D in duopoly with spillovers," Journal of Economics, Springer, vol. 66(2), pages 151-175, June.
  8. Arijit Mukherjee, 2002. "Subsidy and entry: the role of licensing," Oxford Economic Papers, Oxford University Press, vol. 54(1), pages 160-171, January.
  9. d'ASPREMONT, Claude & JACQUEMIN, Alexis, . "Cooperative and noncooperative R&D in duopoly with spillovers," CORE Discussion Papers RP -823, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  10. Marjit, Sugata, 1990. "On a non-cooperative theory of technology transfer," Economics Letters, Elsevier, vol. 33(3), pages 293-298, July.
  11. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December.
  12. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
  13. Arijit Mukherjee, 2001. "Technology transfer with commitment," Economic Theory, Springer, vol. 17(2), pages 345-369.
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Cited by:
  1. Chang, Ray-Yun & Hwang, Hong & Peng, Cheng-Hau, 2013. "Technology licensing, R&D and welfare," Economics Letters, Elsevier, vol. 118(2), pages 396-399.

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