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Revenue royalties: comment

Author

Listed:
  • Marta San Martín

    (University of the Basque Country UPV/EHU
    University of the Basque Country UPV/EHU)

  • Ana I. Saracho

    (University of the Basque Country UPV/EHU
    University of the Basque Country UPV/EHU)

Abstract

We show that the comparison of the two-part licensing mechanisms considered in the San Martín and Saracho (2015) context is exactly identical to that in Colombo and Filippini (J Econ 118:47–76, 2016) context. This means that the results obtained in Colombo and Filippini (J Econ 118:47–76, 2016) when the patentee chooses between per-unit and ad valorem royalties are incorrect. We conclude that when the convexity of the cost function is not too low, the patentee prefers to license by means of a royalty on the value of sales.

Suggested Citation

  • Marta San Martín & Ana I. Saracho, 2021. "Revenue royalties: comment," Journal of Economics, Springer, vol. 132(2), pages 187-192, March.
    • Handle: RePEc:kap:jeczfn:v:132:y:2021:i:2:d:10.1007_s00712-020-00721-9
    DOI: 10.1007/s00712-020-00721-9
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    More about this item

    Keywords

    Cournot oligopoly; Product differentiation; Decreasing returns to scale; Royalties;
    All these keywords.

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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