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Decision Making On Strategic Environmental Technology Licensing: Fixed-Fee Versus Royalty Licensing Methods

Author

Listed:
  • MING-CHUNG CHANG

    (Department of Risk Management, Kainan University, No. 1 Kainan Rd., Luchu, Taoyuan County 338, Taiwan)

  • JIN-LI HU

    (Institute of Business and Management, National Chiao Tung University, No. 118, Sec. 1, Chung-Hsiao W. Rd., Taipei 100, Taiwan)

  • GWO-HSHIUNG TZENG

    (Department of Information Management, Kainan University, No. 1 Kainan Rd., Luchu, Taoyuan County 338, Taiwan;
    Department of Business and Entrepreneurial Management, Kainan University, No. 1 Kainan Rd., Luchu, Taoyuan County 338, Taiwan;
    Institute of Management of Technology, National Chiao Tung University, 100, Ta-Hsueh Rd., Hsinchu 300, Taiwan)

Abstract

Because of a deterioration in the quality of the environment, this paper studies the effects of the environment and the economy on environmental technology licensing in a homogeneous Cournot duopoly model in order to reduce environmental pollution and hence improve social welfare. To this end, two licensing methods — namely, a fixed-fee licensing method and a royalty licensing method — are compared. It is found that a high emission tax rate induces the innovator to not license the environmental technology to the licensee under the fixed-fee licensing method. As for social welfare, a large innovation scale of environmental technology does not guarantee that social welfare will be maximized. Finally, a large innovation scale of environmental technology is likely to increase consumer surplus if the marginal environmental damage is significant. Consumers are likely to prefer royalty licensing to fixed-fee licensing. This conclusion differs from Wang's finding in 2002.

Suggested Citation

  • Ming-Chung Chang & Jin-Li Hu & Gwo-Hshiung Tzeng, 2009. "Decision Making On Strategic Environmental Technology Licensing: Fixed-Fee Versus Royalty Licensing Methods," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 8(03), pages 609-624.
    • Handle: RePEc:wsi:ijitdm:v:08:y:2009:i:03:n:s0219622009003545
    DOI: 10.1142/S0219622009003545
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    Cited by:

    1. Hao Xu & Deqing Tan, 2023. "Optimal Abatement Technology Licensing in a Dynamic Transboundary Pollution Game: Fixed Fee Versus Royalty," Computational Economics, Springer;Society for Computational Economics, vol. 61(3), pages 905-935, March.

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