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Technology licensing and innovation

Author

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  • Mukherjee, Arijit
  • Mukherjee, Soma

Abstract

We show that under a fixed-fee licensing contract if the licenser and the licensee bargain over the licensing fee, licensing decreases (increases) innovation by decreasing (increasing) the strategic (non-strategic) benefit from innovation. However, licensing increases innovation under a two-part tariff licensing contract. Licensing does not reduce social welfare.

Suggested Citation

  • Mukherjee, Arijit & Mukherjee, Soma, 2013. "Technology licensing and innovation," Economics Letters, Elsevier, vol. 120(3), pages 499-502.
    • Handle: RePEc:eee:ecolet:v:120:y:2013:i:3:p:499-502
    DOI: 10.1016/j.econlet.2013.05.015
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    References listed on IDEAS

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    1. Prabal Roy Chowdhury, 2005. "Patents and R & D: The tournament effect," Discussion Papers 05-05, Indian Statistical Institute, Delhi.
    2. Chang, Ray-Yun & Hwang, Hong & Peng, Cheng-Hau, 2013. "Technology licensing, R&D and welfare," Economics Letters, Elsevier, vol. 118(2), pages 396-399.
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    8. Yang, Lei & Maskus, Keith E., 2009. "Intellectual property rights, technology transfer and exports in developing countries," Journal of Development Economics, Elsevier, vol. 90(2), pages 231-236, November.
    9. Marjit, Sugata, 1990. "On a non-cooperative theory of technology transfer," Economics Letters, Elsevier, vol. 33(3), pages 293-298, July.
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    Citations

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    Cited by:

    1. Neelanjan Sen, 2015. "Technology transfer and its effect on innovation," Economics Bulletin, AccessEcon, vol. 35(4), pages 2523-2534.
    2. Kazuhiro Takauchi & Tomomichi Mizuno, 2019. "Consumer-benefiting transport cost: The role of product innovation in a vertical structure," Discussion Papers 1911, Graduate School of Economics, Kobe University.
    3. Lu, Yuanzhu & Banerjee, Swapnendu & Poddar, Sougata, 2019. "Technology licensing and innovation—A correction on two-part tariff analysis," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    4. Leandro M. Meller, 2022. "Patent Length and Breadth as Policy Instruments: A Systematic Review of Recent Contributions to the Theory of Optimal Patent Design," Working Papers 192, Red Nacional de Investigadores en Economía (RedNIE).
    5. Ding, Rong & Ko, Chiu Yu, 2021. "Does licensing improve welfare with rent dissipation?," Economic Modelling, Elsevier, vol. 105(C).
    6. Arijit Mukherjee, 2014. "Patent protection under endogenous product differentiation," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 21(1), pages 78-93, March.
    7. Chennak, Ahmed & Giannakas, Konstantinos, 2023. "Licensing in the agri-food system: The role of cooperatives," 2023 Annual Meeting, July 23-25, Washington D.C. 335916, Agricultural and Applied Economics Association.
    8. Dirk Dohse & Rajeev K. Goel & Michael A. Nelson, 2019. "What induces firms to license foreign technologies? International survey evidence," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 40(7), pages 799-814, October.
    9. Swapnendu Banerjee & Yuanzhu Lu & Sougata Poddar, 2021. "Technology selling and innovation with bargaining," Bulletin of Economic Research, Wiley Blackwell, vol. 73(1), pages 100-107, January.
    10. Colombo, Stefano & Filippini, Luigi, 2014. "Licensing and innovation: A comment," Economics Letters, Elsevier, vol. 125(3), pages 353-356.
    11. Stefano Colombo & Luigi Filippini, 2016. "Revenue royalties," Journal of Economics, Springer, vol. 118(1), pages 47-76, May.
    12. Debasmita Basak & Andreas Hoefele & Arijit Mukherjee, 2022. "Wage bargaining and product innovation: The role of market expansion effect," Manchester School, University of Manchester, vol. 90(3), pages 319-340, June.
    13. Kuang-Cheng Andy Wang & Yi-Jie Wang & Wen-Jung Liang, 2016. "Intellectual property rights, international licensing and foreign direct investment," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 23(3), pages 291-305, July.
    14. Carlo Capuano & Iacopo Grassi, 2020. "Imperfect patent protection, licensing, and willingness to pay for the innovation," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(2), pages 333-359, June.
    15. Gnangnon, Sèna Kimm, 2023. "Do Aid for Trade flows affect Technology Licensing in Recipient Countries?," EconStor Preprints 273419, ZBW - Leibniz Information Centre for Economics.
    16. Ping-Sing Kuo & Yan-Shu Lin & Cheng-Hau Peng, 2016. "International Technology Transfer and Welfare," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 214-227, February.
    17. Carlo Capuano & Iacopo Grassi, 2019. "Imperfect patent protection, licensing, and Social Welfare," Economics Bulletin, AccessEcon, vol. 39(4), pages 2639-2649.
    18. Chen, Fang-Yueh, 2023. "Trade warfare and sanctions in vertically related markets," Economic Modelling, Elsevier, vol. 121(C).
    19. Jinshi Cheng & Bengang Gong & Bangyi Li, 2018. "Cooperation strategy of technology licensing based on evolutionary game," Annals of Operations Research, Springer, vol. 268(1), pages 387-404, September.
    20. Abubakar, Yazid Abdullahi & Hand, Chris & Smallbone, David & Saridakis, George, 2019. "What specific modes of internationalization influence SME innovation in Sub-Saharan least developed countries (LDCs)?," Technovation, Elsevier, vol. 79(C), pages 56-70.

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    More about this item

    Keywords

    Licensing; Innovation; Welfare;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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