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Tariff induced licensing contracts, consumers’ surplus and welfare

Listed author(s):
  • Kabiraj, Abhishek
  • Kabiraj, Tarun
Registered author(s):

    We construct a duopolistic trade model with technology transfer and consider two-part tariff licensing contracts. We show that a tariff on foreign products can influence the licensing strategy of the foreign firm. There is a trade-off between a tariff and a royalty license in affecting the product price. We show in particular that a tariff can be chosen so as to induce fee licensing and maximize both consumers’ surplus and domestic welfare. This resolves the so-called conflict between these two objectives in respect of the choice of a tariff. The paper provides a number of testable hypothesis.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0264999316306381
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    Article provided by Elsevier in its journal Economic Modelling.

    Volume (Year): 60 (2017)
    Issue (Month): C ()
    Pages: 439-447

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    Handle: RePEc:eee:ecmode:v:60:y:2017:i:c:p:439-447
    DOI: 10.1016/j.econmod.2016.11.001
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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