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Technology licensing and collusion

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Listed:
  • Neelanjan Sen
  • Priyansh Minocha
  • Arghya Dutta

Abstract

This paper considers the possibility of technology licensing via fixed‐fee, royalty or two‐part tariff and tacit collusion between firms that produce homogeneous goods under asymmetric cost structures and compete in quantities. In contrast to Lin (1996), all forms of licensing facilitate (obstruct) collusion, if the initial cost difference between the firms is relatively less (more). Technology will always be licensed, and the optimal form of licensing is either fixed‐fee or royalty or two‐part tariff, but collusion may or may not be possible post‐licensing. Welfare decreases after licensing if the firms collude only after licensing but not collude under no‐licensing.

Suggested Citation

  • Neelanjan Sen & Priyansh Minocha & Arghya Dutta, 2023. "Technology licensing and collusion," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(3), pages 694-752, September.
    • Handle: RePEc:bla:ijethy:v:19:y:2023:i:3:p:694-752
    DOI: 10.1111/ijet.12373
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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