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License Fees in Oligopoly When Outside Innovator can Enter the Market: Two-Step Auction

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  • Masahiko Hattori

    (Faculty of Economics, Doshisha University, Kamigyo-ku, Kyoto 602-8580, Japan)

  • Yasuhito Tanaka

    (Faculty of Economics, Doshisha University, Kamigyo-ku, Kyoto 602-8580, Japan)

Abstract

When an outside innovating firm has a cost-reducing technology, it can sell licenses of its technology to incumbent firms, or enter the market and at the same time sell licenses, or enter the market without license. We examine the definitions of license fees in such situations under oligopoly, one outside innovating firm and several incumbent firms, considering threat by entry by the innovating firm using a two-step auction.

Suggested Citation

  • Masahiko Hattori & Yasuhito Tanaka, 2020. "License Fees in Oligopoly When Outside Innovator can Enter the Market: Two-Step Auction," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 22(03), pages 1-15, September.
    • Handle: RePEc:wsi:igtrxx:v:22:y:2020:i:03:n:s0219198920500036
    DOI: 10.1142/S0219198920500036
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    References listed on IDEAS

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    More about this item

    Keywords

    License; entry; oligopoly; innovating firm; two-step auction;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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