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Free licensing to boost aggregate odds for success

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  • Sorek, Gilad

Abstract

We show how technological leader gains from inviting an entrant into R&D competition to improve over existing patented technology, as the entrant takes complementary R&D effort, and the demand for both current and improved technologies is increasing with aggregate probability for successful quality improvement.

Suggested Citation

  • Sorek, Gilad, 2012. "Free licensing to boost aggregate odds for success," Economics Letters, Elsevier, vol. 116(2), pages 183-185.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:2:p:183-185
    DOI: 10.1016/j.econlet.2012.02.013
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    References listed on IDEAS

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    1. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211, June.
    2. Gallini, Nancy T, 1984. "Deterrence by Market Sharing: A Strategic Incentive for Licensing," American Economic Review, American Economic Association, vol. 74(5), pages 931-941, December.
    3. Katharine E. Rockett, 1990. "Choosing the Competition and Patent Licensing," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 161-171, Spring.
    4. Ted O'Donoghue & Suzanne Scotchmer & Jacques‐François Thisse, 1998. "Patent Breadth, Patent Life, and the Pace of Technological Progress," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(1), pages 1-32, March.
    5. James Bessen & Eric Maskin, 2009. "Sequential innovation, patents, and imitation," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 611-635, December.
    6. Joseph Farrell & Nancy T. Gallini, 1988. "Second-Sourcing as a Commitment: Monopoly Incentives to Attract Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(4), pages 673-694.
    7. Andrea Shepard, 1987. "Licensing to Enhance Demand for New Technologies," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 360-368, Autumn.
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    Cited by:

    1. Wang, Wei & Lyu, Gaoyan & Cui, Wei & Li, Yongjian, 2021. "Strategic technology commercialization in the supply chain under network effects," International Journal of Production Economics, Elsevier, vol. 231(C).

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    Keywords

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    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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