Licensing with Free Entry
AbstractThe literature on the licensing of an innovation has mainly focused on some speci c contract types. We show within the framework of a fairly general model that removing these contractual limitations will lead to extreme market outcomes. Speci cally, we nd that when the patentee can employ observable contracts that can condition on market entry, it can achieve the monopoly outcome. Furthermore, when the patentee can only use unconditional quantity forcing contracts, it captures the entire market, albeit not at monopoly price, via a single licensee. Our results point out to the signi cance, and perhaps the particularity, of observable, nonrenegotiable contracts. --
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Bibliographic InfoPaper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79757.
Date of creation: 2013
Date of revision:
Find related papers by JEL classification:
- D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-COM-2014-02-02 (Industrial Competition)
- NEP-IND-2014-02-02 (Industrial Organization)
- NEP-INO-2014-02-02 (Innovation)
- NEP-LAW-2014-02-02 (Law & Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Debapriya Sen & Yair Tauman, 2002. "General licensing schemes for a cost-reducing innovation," Department of Economics Working Papers, Stony Brook University, Department of Economics 02-03, Stony Brook University, Department of Economics.
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- Can Erutku & Yves Richelle, 2007. "Optimal Licensing Contracts and the Value of a Patent," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 16(2), pages 407-436, 06.
- 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.
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