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Fee versus royalty licensing in spatial Cournot competition

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  • Stefano Colombo

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Abstract

This article investigates the optimal licensing mechanism in a spatial model where competitors set quantities and one firm owns a cost-reducing innovation. We show that when the firms spatially discriminate, the innovator gets higher profits by licensing through royalties instead than through a fixed fee, whereas in the case of uniform delivered quantities, the innovator prefers licensing by royalties (fixed fee) if and only if it has not (has) a sufficiently strong locational disadvantage with respect to the potential licensee. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Stefano Colombo, 2014. "Fee versus royalty licensing in spatial Cournot competition," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(3), pages 859-879, May.
  • Handle: RePEc:spr:anresc:v:52:y:2014:i:3:p:859-879
    DOI: 10.1007/s00168-014-0614-4
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    References listed on IDEAS

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    1. Arijit Mukherjee, 2010. "Competition And Welfare: The Implications Of Licensing," Manchester School, University of Manchester, vol. 78(1), pages 20-40, January.
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    Citations

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    Cited by:

    1. John Heywood & Zheng Wang, 2015. "How to license a transport innovation," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(2), pages 485-500, December.
    2. repec:bla:presci:v:96:y:2017:i::p:s207-s220 is not listed on IDEAS

    More about this item

    Keywords

    D45; R10;

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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