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Profit Improving via Strategic Technology Sharing

Author

Listed:
  • Kao Kuo-Feng

    (Department of Industrial Economics, Tamkang University, New Taipei City, Taiwan, Province of China)

  • Peng Cheng-Hau

    () (Department of Economics, Fu Jen Catholic University, 510, Zhongzheng Road, Xinzhuang District, New Taipei City 24205, Taiwan, Province of China)

Abstract

This paper investigates whether a downstream monopolist has an incentive to freely share its technology to potential entrants. With a linear demand, it is more profitable for the downstream monopolist to share its obsolete technology with the potential entrants even with no returns. In this context, technology sharing is a Pareto improvement. Moreover, the profit of the downstream monopolist via technology sharing increases with the number of new entrants, but the nexus between social welfare and the number of new entrants is non-monotonic.

Suggested Citation

  • Kao Kuo-Feng & Peng Cheng-Hau, 2016. "Profit Improving via Strategic Technology Sharing," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1321-1336, September.
  • Handle: RePEc:bpj:bejeap:v:16:y:2016:i:3:p:1321-1336:n:6
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    More about this item

    Keywords

    strategic technology sharing; successive monopoly; vertically-related markets; welfare;

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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