Technology licensing, R&D and welfare
This paper sets up a three-stage (R&D, technology licensing, and output) oligopoly game in which only one of the firms undertakes a cost-reducing R&D and may license the developed technology to the others by means of a two-part tariff (i.e., a per-unit royalty and an upfront fee) contract. It is found with surprise that if the licensor firm’s R&D efficiency is high, the availability of licensing subdues the firm’s R&D incentive, leading to a lower social welfare level. This result implies that a government has to be cautious when encouraging technology licensing among firms.
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- Arijit Mukherjee & Soma Mukherjee, 2002.
"Licensing and the Incentive for Innovation,"
Keele Economics Research Papers
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- Arijit Mukherjee, 2002.
"Innovation, Licensing and Welfare,"
Keele Economics Research Papers
KERP 2002/03, Centre for Economic Research, Keele University.
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- Wang, X. Henry, 1998. "Fee versus royalty licensing in a Cournot duopoly model," Economics Letters, Elsevier, vol. 60(1), pages 55-62, July.
- M. Ishaq Nadiri, 1993. "Innovations and Technological Spillovers," NBER Working Papers 4423, National Bureau of Economic Research, Inc.
- Nadiri, M.I., 1993. "Innovations and Technological Spillovers," Working Papers 93-31, C.V. Starr Center for Applied Economics, New York University.
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