IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v204y2021ics0165176521001877.html
   My bibliography  Save this article

Partial passive ownership holdings and licensing

Author

Listed:
  • Leonardos, Stefanos
  • Petrakis, Emmanuel
  • Skartados, Panagiotis
  • Stamatopoulos, Giorgos

Abstract

In a homogeneous good Cournot duopoly, a firm owns a cost-reducing technology and has a non-controlling share over its rival. We show that partial passive ownership holdings (PPOs) may induce licensing via a fixed fee and increase consumer surplus and social welfare. We thus identify a novel pro-competitive effect of PPOs.

Suggested Citation

  • Leonardos, Stefanos & Petrakis, Emmanuel & Skartados, Panagiotis & Stamatopoulos, Giorgos, 2021. "Partial passive ownership holdings and licensing," Economics Letters, Elsevier, vol. 204(C).
    • Handle: RePEc:eee:ecolet:v:204:y:2021:i:c:s0165176521001877
    DOI: 10.1016/j.econlet.2021.109910
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176521001877
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2021.109910?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Brito, Duarte & Ribeiro, Ricardo & Vasconcelos, Helder, 2019. "Can partial horizontal ownership lessen competition more than a monopoly?," Economics Letters, Elsevier, vol. 176(C), pages 90-95.
    2. José Azar & Martin C. Schmalz & Isabel Tecu, 2018. "Anticompetitive Effects of Common Ownership," Journal of Finance, American Finance Association, vol. 73(4), pages 1513-1565, August.
    3. Brito, Duarte & Ribeiro, Ricardo & Vasconcelos, Helder, 2020. "Overlapping ownership, endogenous quality, and welfare," Economics Letters, Elsevier, vol. 190(C).
    4. Vishwasrao, Sharmila, 2007. "Royalties vs. fees: How do firms pay for foreign technology?," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 741-759, August.
    5. Pedro Mendi, 2005. "The Structure of Payments in Technology Transfer Contracts: Evidence from Spain," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(2), pages 403-429, June.
    6. Bayona, Anna & López, Ángel L., 2018. "Silent financial interests and product innovation," Economics Letters, Elsevier, vol. 170(C), pages 109-112.
    7. Martin C. Schmalz, 2018. "Common-Ownership Concentration and Corporate Conduct," CESifo Working Paper Series 6908, CESifo.
    8. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626, National Bureau of Economic Research, Inc.
    9. Arghya Ghosh & Hodaka Morita, 2017. "Knowledge transfer and partial equity ownership," RAND Journal of Economics, RAND Corporation, vol. 48(4), pages 1044-1067, December.
    10. Papadopoulos, Konstantinos G. & Petrakis, Emmanuel & Skartados, Panagiotis, 2019. "Product innovation transfer under passive partial ownership holdings," Economics Letters, Elsevier, vol. 177(C), pages 22-25.
    11. Ángel L. López & Xavier Vives, 2019. "Overlapping Ownership, R&D Spillovers, and Antitrust Policy," Journal of Political Economy, University of Chicago Press, vol. 127(5), pages 2394-2437.
    12. David Gilo & Yossi Moshe & Yossi Spiegel, 2006. "Partial Cross Ownership and Tacit Collusion," RAND Journal of Economics, The RAND Corporation, vol. 37(1), pages 81-99, Spring.
    13. David Gilo & Yossi Moshe & Yossi Spiegel, 2006. "Partial cross ownership and tacit collusion," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 81-99, March.
    14. 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.
    15. Wang, X. Henry, 1998. "Fee versus royalty licensing in a Cournot duopoly model," Economics Letters, Elsevier, vol. 60(1), pages 55-62, July.
    16. Neelanjan Sen & Rajit Biswas, 2017. "Indirect Taxes in Oligopoly in Presence of Licensing Opportunities," Journal of Industry, Competition and Trade, Springer, vol. 17(1), pages 61-82, March.
    17. Sen, Debapriya & Tauman, Yair, 2018. "Patent licensing in a Cournot oligopoly: General results," Mathematical Social Sciences, Elsevier, vol. 96(C), pages 37-48.
    18. Martin C. Schmalz, 2018. "Common-Ownership Concentration and Corporate Conduct," Annual Review of Financial Economics, Annual Reviews, vol. 10(1), pages 413-448, November.
    19. Vives, Xavier, 2020. "Common ownership, market power, and innovation," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    20. Arman Yalvac Aksoy & Catherine Beaudry, 2021. "How are companies paying for university research licenses? Empirical evidence from university-firm technology transfer," The Journal of Technology Transfer, Springer, vol. 46(6), pages 2051-2121, December.
    21. Li, Sanxi & Ma, Hongkun & Zeng, Chenhang, 2015. "Passive cross holding as a strategic entry deterrence," Economics Letters, Elsevier, vol. 134(C), pages 37-40.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ji Sun & Leonard F. S. Wang, 2023. "Vertical cross‐ownership, input price discrimination, and social welfare," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(2), pages 290-308, June.
    2. Lili Xu & Yidan Zhang & Sang‐Ho Lee, 2024. "Effects of partial passive ownership in a successive endogenous timing game with R&D spillovers," Bulletin of Economic Research, Wiley Blackwell, vol. 76(1), pages 283-297, January.
    3. Xingtang Wang & Leonard F. S. Wang, 2023. "Vertical shareholding, vertical product differentiation and social welfare," Metroeconomica, Wiley Blackwell, vol. 74(3), pages 478-494, July.
    4. Arijit Mukherjee, 2023. "Losses from cross-holdings in a duopoly with convex cost and strategic input price determination," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 81-91, April.
    5. Chuyuan Zhang & Sang‐Ho Lee, 2023. "Foreign passive ownership and tariff‐induced free technology transfer under vertical integration," Manchester School, University of Manchester, vol. 91(2), pages 89-117, March.
    6. Pin Zhou & Hong Hong, 2022. "Horizontal partial shareholding, dual purpose concern, and mixed duopoly competition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3107-3115, October.
    7. Cho, Sumi & Kim, Doori & Lee, Sang-Ho, 2022. "Free licensing strategy and ex-post privatization policy with passive ownership," Economic Modelling, Elsevier, vol. 106(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hariskos, W. & Königstein, M. & Papadopoulos, K.G., 2022. "Anti-competitive effects of partial cross-ownership: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 193(C), pages 399-409.
    2. Bayona, Anna & López, Ángel L. & Manganelli, Anton-Giulio, 2022. "Common ownership, corporate control and price competition," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 1066-1075.
    3. Cho, Sumi & Kim, Doori & Lee, Sang-Ho, 2022. "Free licensing strategy and ex-post privatization policy with passive ownership," Economic Modelling, Elsevier, vol. 106(C).
    4. Chuyuan Zhang & Sang‐Ho Lee, 2023. "Foreign passive ownership and tariff‐induced free technology transfer under vertical integration," Manchester School, University of Manchester, vol. 91(2), pages 89-117, March.
    5. Arijit Mukherjee, 2023. "Losses from cross-holdings in a duopoly with convex cost and strategic input price determination," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 81-91, April.
    6. Papadopoulos, Konstantinos G. & Petrakis, Emmanuel & Skartados, Panagiotis, 2019. "Product innovation transfer under passive partial ownership holdings," Economics Letters, Elsevier, vol. 177(C), pages 22-25.
    7. Brito, Duarte & Ribeiro, Ricardo & Vasconcelos, Helder, 2020. "Overlapping ownership, endogenous quality, and welfare," Economics Letters, Elsevier, vol. 190(C).
    8. Zormpas, Dimitrios & Ruble, Richard, 2021. "The dynamics of preemptive and follower investments with overlapping ownership," Journal of Economic Dynamics and Control, Elsevier, vol. 129(C).
    9. Jianxia Yang & Chenhang Zeng, 2021. "Collusive stability of cross-holding with cost asymmetry," Theory and Decision, Springer, vol. 91(4), pages 549-566, November.
    10. Koch, Andrew & Panayides, Marios & Thomas, Shawn, 2021. "Common ownership and competition in product markets," Journal of Financial Economics, Elsevier, vol. 139(1), pages 109-137.
    11. Lili Xu & Yidan Zhang & Sang‐Ho Lee, 2024. "Effects of partial passive ownership in a successive endogenous timing game with R&D spillovers," Bulletin of Economic Research, Wiley Blackwell, vol. 76(1), pages 283-297, January.
    12. Samuel Haas & Johannes Paha, 2021. "Non-Controlling Minority Shareholdings and Collusion," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 58(3), pages 431-454, May.
    13. Brito, Duarte & Ribeiro, Ricardo & Vasconcelos, Helder, 2018. "Quantifying the coordinated effects of partial horizontal acquisitions," European Economic Review, Elsevier, vol. 110(C), pages 108-149.
    14. Ruichang Lu & Qiaowei Shen & Tenghui Wang & Xiaojun Zhang, 2022. "Frenemies: Corporate Advertising Under Common Ownership," Management Science, INFORMS, vol. 68(6), pages 4645-4669, June.
    15. Hirose, Kosuke & Matsumura, Toshihiro, 2022. "Common ownership and environmental Corporate Social Responsibility," Energy Economics, Elsevier, vol. 114(C).
    16. Santhosh Ramalingegowda & Steven Utke & Yong Yu, 2021. "Common Institutional Ownership and Earnings Management," Contemporary Accounting Research, John Wiley & Sons, vol. 38(1), pages 208-241, March.
    17. Li, Youping & Zhang, Jianhu & Zhou, Zipeng, 2023. "Vertical differentiation with overlapping ownership," Economics Letters, Elsevier, vol. 222(C).
    18. Heijnen, Pim & Schoonbeek, Lambert, 2020. "Cross-shareholdings and competition in a rent-seeking contest," International Journal of Industrial Organization, Elsevier, vol. 71(C).
    19. Hirose, Kosuke & Matsumura, Toshihiro, 2023. "Green transformation in oligopoly markets under common ownership," Energy Economics, Elsevier, vol. 126(C).
    20. Jie Shuai & Mengyuan Xia & Chenhang Zeng, 2023. "Upstream market structure and downstream partial ownership," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(1), pages 22-47, January.

    More about this item

    Keywords

    Partial passive ownership; Licensing; Fixed fee; Welfare;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:204:y:2021:i:c:s0165176521001877. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.