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Patent Licensing: The Inside Story

  • Kamien, Morton I
  • Tauman, Yair

In this paper we compare and contrast the most profitable modes of licensing a cost-reducing invention by an inventor who is an industry incumbent with one who is not. We find that an industry incumbent favors licensing by means of a royalty per unit of output to which the new technology is applied while an outsider prefers to auction off a fixed number of licences outright. Our analysis also suggests that an outside inventor finds it most profitable to target greater cost-reducing inventions to monopolistic industries while an incumbent inventor favors competitive industries. Copyright 2002 by Blackwell Publishers Ltd and The Victoria University of Manchester

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Article provided by University of Manchester in its journal Manchester School.

Volume (Year): 70 (2002)
Issue (Month): 1 (January)
Pages: 7-15

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Handle: RePEc:bla:manchs:v:70:y:2002:i:1:p:7-15
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