Optimal Licensing Contracts and the Value of a Patent
"We extend Kamien and Tauman's (1986) analysis of the value of a patent. We find that an inventor can always design a fixed fee plus royalty contract such that his revenue is equal to the profit a monopoly endowed with the innovation could make on the market. This implies that the social value of a patent can be strictly negative whenever the patented innovation is of bad quality. We also explain why a principal can have an interest in using performance-based contracts although the principal and the agents are risk-neutral, information is symmetric, and agents' actions are verifiable." Copyright 2007, The Author(s) Journal Compilation (c) 2007 Blackwell Publishing.
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Volume (Year): 16 (2007)
Issue (Month): 2 (06)
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