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Whom to license patented technology

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  • Sang-Seung Yi

    (Department of Economics, Sogang University, Seoul, Korea)

Abstract

This paper examines the optimal licensing policy of a patent holder when potential licensees differ in their capacities in absorbing the patented technology. If two-part tariffs with non-negative royalties and fixed fees are feasible, the patent holder finds it optimal to license the strong firm exclusively whether or not an exclusive licensing of the weak firm deters the strong firm from entering the market. Hence, the potential trade-offs between strategic gains associated with licensing to weak competitors and efficiency gains associated with licensing to efficient competitors do not exist when two part tariffs are available. © 1998 John Wiley & Sons, Ltd.

Suggested Citation

  • Sang-Seung Yi, 1998. "Whom to license patented technology," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 19(3), pages 189-195.
  • Handle: RePEc:wly:mgtdec:v:19:y:1998:i:3:p:189-195 DOI: 10.1002/(SICI)1099-1468(199805)19:3<189::AID-MDE879>3.0.CO;2-G
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Derek Clark & Øystein Foros & Jan Sand, 2011. "Foreclosure in contests," Public Choice, Springer, vol. 148(1), pages 215-232, July.
    2. Vishwasrao, Sharmila, 2007. "Royalties vs. fees: How do firms pay for foreign technology?," International Journal of Industrial Organization, Elsevier, vol. 25(4), pages 741-759, August.
    3. Soo Jeoung Sohn, 2006. "Choosing the partners in the licensing alliance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 251-260.

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