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Exclusive Licensing in a Sequence of Innovations

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  • Sharon Oster

Abstract

In this paper, I examine the issues involved with sequential licensing of innovations. In particular, a model is developed in which the granting of an exclusive license has the potential to distort future industrial structure. Subsequent licensing negotiations are then affected by the initial exclusivity, giving the initial licensee more leverage in bidding. This dynamic effect gives firms strategic incentives to take exclusive licenses, even when, in a one-shot market, such licenses would not be optimal. Appropriate antitrust rules in the context of sequential innovations are then discussed.

Suggested Citation

  • Sharon Oster, 1995. "Exclusive Licensing in a Sequence of Innovations," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 2(2), pages 185-198.
  • Handle: RePEc:taf:ijecbs:v:2:y:1995:i:2:p:185-198
    DOI: 10.1080/758519307
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    Citations

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    Cited by:

    1. James E. Prieger & Wei‐Min Hu, 2012. "Applications Barrier To Entry And Exclusive Vertical Contracts In Platform Markets," Economic Inquiry, Western Economic Association International, vol. 50(2), pages 435-452, April.
    2. Gordanier, John & Miao, Chun-Hui, 2011. "On the duration of technology licensing," International Journal of Industrial Organization, Elsevier, vol. 29(6), pages 755-765.
    3. Mowery, David C. & Ziedonis, Arvids A., 2015. "Markets versus spillovers in outflows of university research," Research Policy, Elsevier, vol. 44(1), pages 50-66.

    More about this item

    Keywords

    sequential licensing; innovations; industry structure; exclusivity; JEL classifications: L123 L40; O31;

    JEL classification:

    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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