IDEAS home Printed from https://ideas.repec.org/a/fec/journl/v2y2007i3p424-457.html

Endogenous licensing in cumulative innovation

Author

Listed:
  • KOU Zonglai

    (China Center for Economic Studies, School of Economics, Fudan University, Shanghai 200433, China)

  • ZHANG Jian

    (School of Economics, Fudan University, Shanghai 200433, China)

Abstract

This paper analyzes the endogeneity of licensing arrangements in cost-reducing cumulative innovation. There exists the following results. First, for the first-generation patentee, ex post licensing matters for rent extraction while ex ante licensing matters for efficiency. Second, if the second-generation innovator does not exit, then the firms' profits as well as social welfare are all irrelevant to whether ex ante licensing is allowed. Third, costly litigation can occur on the equilibrium path and its occurrence is also irrelevant to ex ante licensing. Interestingly, the conditional probability of the first-generation patentee winning litigation first decreases and then increases in patent breadth. Fourth, optimal patent breadth depends on the tradeoff between litigation costs and antitrust effect.

Suggested Citation

  • KOU Zonglai & ZHANG Jian, 2007. "Endogenous licensing in cumulative innovation," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 2(3), pages 424-457, September.
    • Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:424-457
    as

    Download full text from publisher

    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0022-0
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

    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:fec:journl:v:2:y:2007:i:3:p:424-457. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Frank H. Liu The email address of this maintainer does not seem to be valid anymore. Please ask Frank H. Liu to update the entry or send us the correct address (email available below). General contact details of provider: .

    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.