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Licensing Innovation in Mixed Multinational Markets with Stackelberg Leadership

Author

Listed:
  • Ali Dadpay

    (Gupta College of Business, University of Dallas)

  • Faraz Farhidi

    (NV Energy)

  • Greg Bell

    (Gupta College of Business, University of Dallas)

  • J. Alejandro Gelves

    (Raymond A. Mason School of Business, College of William and Mary)

Abstract

This article departs from existing literature by including licensing in a multinational market where the innovator is the Stackelberg leader. When the domestic mixed-ownership firm is the leading innovator, it focuses on local social welfare. Thus, the royalty it charges becomes a function of level privatization. As the private share in the domestic firm increases, the leader increases the royalty it charges. The relationship is reversed when the foreign firm becomes the innovator. The optimal licensing policy is a mix of a fixed fee and a royalty, with a difference that a Stackelberg leader charges more than a Cournot competitor.

Suggested Citation

  • Ali Dadpay & Faraz Farhidi & Greg Bell & J. Alejandro Gelves, 2022. "Licensing Innovation in Mixed Multinational Markets with Stackelberg Leadership," Journal of Industry, Competition and Trade, Springer, vol. 22(3), pages 411-428, December.
    • Handle: RePEc:kap:jincot:v:22:y:2022:i:3:d:10.1007_s10842-022-00389-5
    DOI: 10.1007/s10842-022-00389-5
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    References listed on IDEAS

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    Cited by:

    1. Madhuri H.Shastry & Uday Bhanu Sinha, 2023. "Privatization and Licensing under Public Budget Constraint," Working papers 343, Centre for Development Economics, Delhi School of Economics.

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    More about this item

    Keywords

    Mixed oligopoly; Innovation; Optimal licensing; Partial privatization; Unit royalty; Fixed fee;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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