IDEAS home Printed from https://ideas.repec.org/h/wsi/wschap/9789813233027_0030.html

On intrabrand and interbrand competition: The strategic role of fees and royalties

In: Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy

Author

Listed:
  • Kamal Saggi
  • Nikolaos Vettas

Abstract

We examine oligopolistic markets with both intrabrand and interbrand competition. We characterize equilibrium contracts involving a royalty (or wholesale price) and a fee when each upstream “rm contracts with multiple downstream “rms. Royalties control competition between own downstream “rms at the expense of making them passive against rivals. When the number of downstream “rms is endogenous, each upstream “rm chooses to have only one downstream “rm. This result is in sharp contrast to previous literature where competitors bene”t by having a larger number of independent down-stream “rms under only “xed fee payments. We discuss why allowing upstream “rms to charge per-unit payments in addition to “xed fees dramatically alters their strategic incentives.

Suggested Citation

  • Kamal Saggi & Nikolaos Vettas, 2023. "On intrabrand and interbrand competition: The strategic role of fees and royalties," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 30, pages 659-670, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789813233027_0030
    as

    Download full text from publisher

    File URL: https://www.worldscientific.com/doi/pdf/10.1142/9789813233027_0030
    Download Restriction: Ebook Access is available upon purchase.
    File URL: https://www.worldscientific.com/doi/abs/10.1142/9789813233027_0030
    Download Restriction: Ebook Access is available upon purchase.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Antonio Tesoriere, 2021. "Drastic innovation reduces firms’ incentives to create divisions," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 971-994, October.
    3. Martino De Stefano & Marc Rysman, 2010. "Competition Policy as Strategic Trade with Differentiated Products," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 758-771, September.
    4. Awi Federgruen & Ming Hu, 2016. "Technical Note—Sequential Multiproduct Price Competition in Supply Chain Networks," Operations Research, INFORMS, vol. 64(1), pages 135-149, February.
    5. Ramon Fauli-Oller, 2024. "Divisionalization and symmetric product differentiation," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(2), pages 211-217, December.
    6. Eichberger, Jürgen & Mueller-Langer, Frank, 2012. "On the Welfare Effects of Exclusive Distribution Arrangements," MPRA Paper 39691, University Library of Munich, Germany.
    7. Rafael MONER-COLONQUES & José J. SEMPERE-MONERRIS & Amparo URBANO, 2002. "The Manufacturers’ Choice of Brand Policy under Successive Duopoly," LIDAM Discussion Papers IRES 2002003, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. Griva, Krina & Vettas, Nikolaos, 2015. "On two-part tariff competition in a homogeneous product duopoly," International Journal of Industrial Organization, Elsevier, vol. 41(C), pages 30-41.
    9. Konishi, Hideo & Sandfort, Michael T., 2003. "Anchor stores," Journal of Urban Economics, Elsevier, vol. 53(3), pages 413-435, May.
    10. Michèle Breton & Lucia Sbragia, 2021. "Intra-brand competition in a differentiated oligopoly," Journal of Economics, Springer, vol. 132(1), pages 1-40, January.
    11. Heywood, John S. & Li, Jianpei & Ye, Guangliang, 2014. "Per unit vs. ad valorem royalties under asymmetric information," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 38-46.
    12. Michael Polemis & Konstantinos Eleftheriou, 2018. "To Regulate Or To Deregulate? The Role Of Downstream Competition In Upstream Monopoly Vertically Linked Markets," Bulletin of Economic Research, Wiley Blackwell, vol. 70(1), pages 51-63, January.
    13. Vettas, Nikolaos & Petrakis, Emmanuel & Milliou, Chrysovalantou, 2003. "Endogenous Contracts Under Bargaining in Competing Vertical Chains," CEPR Discussion Papers 3976, C.E.P.R. Discussion Papers.
    14. Kamal Saggi & Nikolaos Vettas, 2023. "On intrabrand and interbrand competition: The strategic role of fees and royalties," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 30, pages 659-670, World Scientific Publishing Co. Pte. Ltd..
    15. Hui-Ling Chung & Yan-Shu Lin & Jin-Li Hu, 2013. "Bundling strategy and product differentiation," Journal of Economics, Springer, vol. 108(3), pages 207-229, April.
    16. DongJoon Lee & Kangsik Choi & Kyuchan Hwang, 2017. "First-Mover and Second-Mover Advantages in a Bilateral Duopoly," Korean Economic Review, Korean Economic Association, vol. 33, pages 35-53.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:wschap:9789813233027_0030. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscientific.com/page/worldscibooks .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.