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Technology Licensing and Grantbacks under Hidden Information

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  • Richard Dutu
  • Benoit Julien

Abstract

This paper explores technological transfer via licensing under hidden information. The transaction features a quality choice of technology to be transferred between a licensor and a licensee that has private information about its ability to implement and refine the technology. The model accounts for the possible damage that drastic refinements and reverse licensing can do to the licensor´s market position, and makes predictions on the structure of licensing contracts. We show under what conditions a licensing contract will include a further contractual provision such as a grantback clause. Finally, the welfare implications of grantback inclusion are assessed.

Suggested Citation

  • Richard Dutu & Benoit Julien, 2009. "Technology Licensing and Grantbacks under Hidden Information," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 165(4), pages 561-578, December.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200912)165:4_561:tlaguh_2.0.tx_2-3
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    References listed on IDEAS

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    Cited by:

    1. Dusanee Kesavayuth, 2017. "The benefits of the reciprocal grantback clause in patent licensing," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(5), pages 418-428, July.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts

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