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Strategic licensing, exports, FDI, and host country welfare

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  • Uday Bhanu Sinha

Abstract

This paper analyses the preference of a foreign firm over serving a host country market and its impact on the host country welfare. We show that the foreign firm can choose licensing its superior technology to a host firm strategically which influences the foreign firm's subsequent preference over exporting and FDI. The effect on the host country welfare depends on the structure of license fee and it is shown that strategic licensing might lead to welfare loss for the host country. To this end this paper also prescribes either an optimal tariff scheme or a ban on licensing to maximize the host country welfare. Copyright 2010 Oxford University Press 2009 All rights reserved, Oxford University Press.

Suggested Citation

  • Uday Bhanu Sinha, 2010. "Strategic licensing, exports, FDI, and host country welfare," Oxford Economic Papers, Oxford University Press, vol. 62(1), pages 114-131, January.
  • Handle: RePEc:oup:oxecpp:v:62:y:2010:i:1:p:114-131
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    File URL: http://hdl.handle.net/10.1093/oep/gpp014
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    Citations

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    Cited by:

    1. Chang, Ray-Yun & Hwang, Hong & Peng, Cheng-Hau, 2013. "Technology licensing, R&D and welfare," Economics Letters, Elsevier, vol. 118(2), pages 396-399.
    2. repec:krk:eberjl:v:5:y:2017:i:1:p:151-167 is not listed on IDEAS
    3. repec:kap:jeczfn:v:121:y:2017:i:2:d:10.1007_s00712-017-0523-y is not listed on IDEAS
    4. Ghosh, Arghya & Saha, Souresh, 2015. "Price competition, technology licensing and strategic trade policy," Economic Modelling, Elsevier, vol. 46(C), pages 91-99.
    5. Kuang-Cheng Andy Wang & Ching-Chih Tseng & Wen-Jung Liang, 2016. "Patent Licensing in the Presence of Trade Barriers," The Japanese Economic Review, Japanese Economic Association, vol. 67(3), pages 329-347, September.
    6. Pedro Mendi & Rafael Moner-Colonques & José J. Sempere-Monerris, 2016. "Optimal know-how transfers in licensing contracts," Journal of Economics, Springer, vol. 118(2), pages 121-139, June.
    7. Manasakis, Constantine & Mitrokostas, Evangelos & Petrakis, Emmanuel, 2017. "Strategic corporate social responsibility by a multinational firm," DICE Discussion Papers 246, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    8. Andrzej Cieslik, 2016. "Exports Versus Fdi In Smith-Motta Framework," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 11(2), pages 189-218, June.
    9. Shuai Niu, 2014. "The Optimal Licensing Policy," Manchester School, University of Manchester, vol. 82(2), pages 202-217, March.
    10. Ping-Sing Kuo & Yan-Shu Lin & Cheng-Hau Peng, 2016. "International Technology Transfer and Welfare," Review of Development Economics, Wiley Blackwell, vol. 20(1), pages 214-227, February.
    11. repec:bla:rdevec:v:21:y:2017:i:3:p:497-510 is not listed on IDEAS
    12. Seung-Leul Kim & Sang-Ho Lee, 2014. "Eco-Technology Licensing under Emission Tax: Royalty vs. Fixed-Fee," Korean Economic Review, Korean Economic Association, vol. 30, pages 273-300.
    13. Tarun Kabiraj & Uday Bhanu Sinha, 2015. "Foreign Entry, Acquisition Target and Host Country Welfare," Manchester School, University of Manchester, vol. 83(6), pages 725-748, December.

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