Profit-Enhancing Know-How Disclosure: A Strategic View
In general, the disclosure of know-how and technological knowledge could harm the disclosing firm. Firms, however, often share their know-how freely and yet enhance their profits. We provide a theoretical framework and a new insight into know-how disclosure. We consider a multiproduct oligopolistic market in which an incumbent firm that can disclose its cost-reducing know-how and several new entrants exist. Each firm supplies products in two separate markets. The incumbent firm has already allocated its production resources to one market (market A) and discloses its know-how concerning production in market A. We show that the disclosure of know-how for cost reduction can enhance the profit of the incumbent (the disclosing) firm. Using the disclosed know-how, the entrants can produce for a low cost in market A and allocate their production resources to the other market. As a result, competition in market A is less severe than that in the case in which the incumbent does not disclose its know-how. We also provide several extensions of the basic scenario.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 80 (2012)
Issue (Month): 5 (09)
|Contact details of provider:|| Postal: Manchester M13 9PL|
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1463-6786
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=1463-6786|
References listed on IDEAS
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.:
- Sudipto Bhattacharya & Jay R. Ritter, 1983. "Innovation and Communication: Signalling with Partial Disclosure," Review of Economic Studies, Oxford University Press, vol. 50(2), pages 331-346.
- Vincenzo Denicolo & Luigi Alberto Franzoni, 2004. "Patents, Secrets, and the First-Inventor Defense," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(3), pages 517-538, 09.
- Cowan, R. & Jonard, N., 2003.
"The dynamics of collective invention,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 52(4), pages 513-532, December.
- Paul Klemperer, 1990.
"How Broad Should the Scope of Patent Protection Be?,"
RAND Journal of Economics,
The RAND Corporation, vol. 21(1), pages 113-130, Spring.
- Klemperer, Paul, 1990. "How Broad Should the Scope of Patent Protection Be?," CEPR Discussion Papers 392, C.E.P.R. Discussion Papers.
- James J. Anton & Dennis A. Yao, 2003. "Patents, Invalidity, and the Strategic Transmission of Enabling Information," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(2), pages 151-178, 06.
- Allen, Robert C., 1983. "Collective invention," Journal of Economic Behavior & Organization, Elsevier, vol. 4(1), pages 1-24, March.
- Norman, George & Thisse, Jacques-Francois, 1999.
"Technology Choice and Market Structure: Strategic Aspects of Flexible Manufacturing,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 47(3), pages 345-72, September.
- George Norman & Jacques-François Thisse, 1998. "Technology Choice and Market Structure: Strategic Aspects of Flexible Manufacturing," Discussion Papers Series, Department of Economics, Tufts University 9808, Department of Economics, Tufts University.
- NORMAN, George & THISSE, Jacques-François, 1996. "Technology choice and market structure : strategic aspects of flexible manufacturing," CORE Discussion Papers 1996059, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Lerner, Josh & Tirole, Jean, 2002. "Some Simple Economics of Open," Journal of Industrial Economics, Wiley Blackwell, vol. 50(2), pages 197-234, June.
- B. Curtis Eaton & Mukesh Eswaran, 2001. "Know-how sharing with stochastic innovations," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 525-548, May.
- Michael L. Katz & Carl Shapiro, 1986. "How to License Intangible Property," The Quarterly Journal of Economics, Oxford University Press, vol. 101(3), pages 567-589.
- Richard Gilbert and Carl Shapiro., 1989.
"Optimal Patent Length and Breadth,"
Economics Working Papers
89-102, University of California at Berkeley.
- Eric von Hippel, 1994. ""Sticky Information" and the Locus of Problem Solving: Implications for Innovation," Management Science, INFORMS, vol. 40(4), pages 429-439, April.
- Michael Kende, 1998. "Profitability under an Open versus a Closed System," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(2), pages 307-326, 06.
- HAMILTON, Jonathan H. & THISSE, Jacques-François & WESKAMP, Anita, .
"Spatial discrimination. Bertrand vs. Cournot in a model of location choice,"
CORE Discussion Papers RP
846, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Hamilton, Jonathan H. & Thisse, Jacques-Francois & Weskamp, Anita, 1989. "Spatial discrimination : Bertrand vs. Cournot in a model of location choice," Regional Science and Urban Economics, Elsevier, vol. 19(1), pages 87-102, February.
- Michael L. Katz & Carl Shapiro, 1985. "On the Licensing of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 504-520, Winter.
- Garth Saloner, 1990. "Symposium on Patents and Technology Licensing," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 103-105, Spring.
- Morton I. Kamien & Yair Tauman, 1986.
"Fees Versus Royalties and the Private Value of a Patent,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 101(3), pages 471-491.
- Morton I. Kamien & Yair Tauman, 1984. "Fees Versus Royalties and the Private Value of a Patent," Discussion Papers 583, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Ogawa, Susumu, 1998. "Does sticky information affect the locus of innovation? Evidence from the Japanese convenience-store industry," Research Policy, Elsevier, vol. 26(7-8), pages 777-790, April.
- Noriaki Matsushima & Toshihiro Matsumura, 2003. "Mixed oligopoly and spatial agglomeration," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 62-87, February.
- James J. Anton & Dennis A. Yao, 2004. "Little Patents and Big Secrets: Managing Intellectual Property," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 1-22, Spring.
- Mikko Mustonen, 2005. "When Does a Firm Support Substitute Open Source Programming?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(1), pages 121-139, 03.
- Masahiro Okuno-Fujiwara & Andrew Postlewaite & Kotaro Suzumura, 1990. "Strategic Information Revelation," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 25-47.
- Pal, Debashis, 1998. "Does Cournot competition yield spatial agglomeration?," Economics Letters, Elsevier, vol. 60(1), pages 49-53, July.
- Anderson, Simon P & Neven, Damien J, 1991. "Cournot Competition Yields Spatial Agglomeration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(4), pages 793-808, November.
- Curtis Eaton, B. & Schmitt, N., 1991.
"Flexible Manufacturing and Market Structure,"
1991-02, Tasmania - Department of Economics.
- De Fraja, Giovanni, 1993. "Strategic spillovers in patent races," International Journal of Industrial Organization, Elsevier, vol. 11(1), pages 139-146, March.
- Matsushima, Noriaki, 2001. "Cournot competition and spatial agglomeration revisited," Economics Letters, Elsevier, vol. 73(2), pages 175-177, November.
When requesting a correction, please mention this item's handle: RePEc:bla:manchs:v:80:y:2012:i:5:p:560-579. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.