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Technological spillover and the time distribution of licenses

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  • Elisabetta Ottoz

    (Dipartimento di Economia)

Abstract

The aim of this note is to study the optimal licensing of a non drastic cost reducing patented innovation, if the patent holder facing spillover is not only concerned with the optimal number of licenses, but also with their time distrbution. A simple three agents model, a patentee and two adopting firms, elucidates the conditions under which the patent holder prefers exclusive innovation exploitation, giving rise to a monopoly, non exclusive exploitation giving rise to a duopoly of simultaneous adoption or a mix of exclusive exploitation in the first period and non exclusive one in the second period, giving rise to a diffusion process. The results show that for very small cost reductions the patent holder prefers early simultaneous adoption, whereas diffusion, implying asymmetric adoption, is better if the innovation implies a more substantial cost reduction, coupled with a sufficient spillover. Exclusive license is limited to a consistent innovation with very little spillover.

Suggested Citation

  • Elisabetta Ottoz, 2005. "Technological spillover and the time distribution of licenses," Economics Bulletin, AccessEcon, vol. 15(15), pages 1-10.
    • Handle: RePEc:ebl:ecbull:eb-05o30005
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    References listed on IDEAS

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    Keywords

    licenses;

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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