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On Technology Licensing In A Stackelberg Duopoly

Author

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  • X. HENRY WANG
  • BILL Z. YANG

Abstract

This paper finds that in a linear Stackelberg duopoly model, the follower is more likely to license a cost‐reducing innovation to the leader than the leader is to the follower, regardless of whether licensing is in the form of a fixed fee or royalty per unit of output. Under fixed‐fee licensing, the follower gains more from small innovations while the leader gains more from large non‐drastic innovations. Under royalty licensing, the follower always gains more than the leader from an innovation.

Suggested Citation

  • X. Henry Wang & Bill Z. Yang, 2004. "On Technology Licensing In A Stackelberg Duopoly," Australian Economic Papers, Wiley Blackwell, vol. 43(4), pages 448-458, December.
    • Handle: RePEc:bla:ausecp:v:43:y:2004:i:4:p:448-458
    DOI: 10.1111/j.1467-8454.2004.00241.x
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    Cited by:

    1. Masahiko Hattori & Yasuhito Tanaka, 2017. "License or Entry in Duopoly with Quality Improving Innovation: Alternative Definitions of License Fee," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 13(1), pages 1-26, February.
    2. Masahiko Hattori & Yasuhito Tanaka, 2020. "License Fees in Oligopoly When Outside Innovator can Enter the Market: Two-Step Auction," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 22(03), pages 1-15, September.
    3. Hattori, Masahiko & Tanaka, Yasuhito, 2016. "License or entry in oligopoly," MPRA Paper 73547, University Library of Munich, Germany.
    4. Masahiko Hattori & Yasuhito Tanaka, 2018. "License and Entry Strategies for an Outside Innovator Under Duopoly with Combination of Royalty and Fixed Fee," Journal of Industry, Competition and Trade, Springer, vol. 18(4), pages 485-502, December.
    5. Masahiko Hattori & Yasuhito Tanaka, 2016. "Subsidizing New Technology Adoption in a Stackelberg Duopoly: Cases of Substitutes and Complements," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 2(2), pages 197-215, July.
    6. Yan, Bo & Ahmadi, Atefeh & Mehrabbeik, Mahtab & Rajagopal, Karthikeyan & He, Shaobo & Jafari, Sajad, 2022. "Expanding the duopoly Stackelberg game with marginal costs into a multipoly game with lowering the burden of mathematical calculations: a numerical analysis," Chaos, Solitons & Fractals, Elsevier, vol. 164(C).
    7. Manel Antelo & Lluís Bru, 2022. "Per-unit versus ad-valorem royalty licensing in a Stackelberg market," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(1), pages 95-109, March.
    8. Masahiko Hattori & Yasuhito Tanaka, 2021. "License and entry strategies for an outside innovator in Stackelberg duopoly with royalty and fixed fee under vertical differentiation," International Journal of Economic Theory, The International Society for Economic Theory, vol. 17(3), pages 234-257, September.
    9. Hattori, Masahiko & Tanaka, Yasuhito, 2017. "Royalty and license fee under vertical differentiation in oligopoly with or without entry of innovator: Two-step auction," MPRA Paper 78859, University Library of Munich, Germany.
    10. Masahiko Hattori & Yasuhito Tanaka, 2016. "Taxation or Subsidization Policy for New Technology Adoption in Oligopoly," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 15(2), pages 161-172, December.
    11. Masahiko Hattori & Yasuhito Tanaka, 2018. "License and Entry Strategies for an Outside Innovator Under Duopoly," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 4(1), pages 135-152, March.
    12. Masahiko Hattori & Yasuhito Tanaka, 2017. "Competitiveness of Firm Behavior and Public Policy for New Technology Adoption in an Oligopoly," Journal of Industry, Competition and Trade, Springer, vol. 17(2), pages 135-151, June.
    13. Masahiko Hattori & Yasuhito Tanaka, 2017. "Competitiveness and Subsidy or Tax Policy for New Technology Adoption in Duopoly," Global Economic Review, Taylor & Francis Journals, vol. 46(1), pages 18-32, January.
    14. Masahiko Hattori & Yasuhito Tanaka, 2016. "License or entry with vertical differentiation in duopoly," Economics and Business Letters, Oviedo University Press, vol. 5(1), pages 17-29.
    15. Hattori, Masahiko & Tanaka, Yasuhito, 2017. "Vertical differentiation in oligopoly and license fees when outside innovator can enter the market: Two-step auction," MPRA Paper 78987, University Library of Munich, Germany.
    16. Hattori, Masahiko & Tanaka, Yasuhito, 2017. "License and entry strategies for outside innovator in duopoly," MPRA Paper 76444, University Library of Munich, Germany.
    17. Hattori, Masahiko & Tanaka, Yasuhito, 2017. "License and entry strategies for an outside innovator in duopoly with combination of royalty and fixed fee under vertical differentiation," MPRA Paper 78856, University Library of Munich, Germany.
    18. Zhang, Huaige & Wang, Xuejun & Qing, Ping & Hong, Xianpei, 2016. "Optimal licensing of uncertain patents in a differentiated Stackelberg duopolistic competition market," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 215-229.
    19. Hattori, Masahiko & Tanaka, Yasuhito, 2017. "License or entry decision for innovator in international duopoly with convex cost functions," MPRA Paper 78996, University Library of Munich, Germany.
    20. Hattori, Masahiko & Tanaka, Yasuhito, 2017. "License and entry decision for innovating firm in international duopoly under vertical differentiation," MPRA Paper 78995, University Library of Munich, Germany.
    21. Luigi Filippini, 2005. "Licensing Contract In A Stackelberg Model," Manchester School, University of Manchester, vol. 73(5), pages 582-598, September.
    22. Hattori, Masahiko & Tanaka, Yasuhito, 2017. "Royalty and license fee under oligopoly with or without entry of innovator: Two-step auction," MPRA Paper 78858, University Library of Munich, Germany.
    23. Masahiko Hattori & Yasuhito Tanaka, 2015. "Subsidy or tax policy for new technology adoption in duopoly with quadratic and linear cost functions," Economics Bulletin, AccessEcon, vol. 35(2), pages 1423-1433.
    24. Masahiko Hattori & Yasuhito Tanaka, 2020. "Entry of Innovator and License in Oligopoly," Journal of Industry, Competition and Trade, Springer, vol. 20(4), pages 709-731, December.

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