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The Unilateral Incentives for Technology Transfers: Predation by Proxy (and Deterrence)

Author

Listed:
  • Anthony Creane

    (Michigan State University)

  • Hideo Konishi

    () (Boston College)

Abstract

Joint production between rival firms often entails knowledge transfers without direct compensation, leaving the question as to why more efficient firms would give their rivals such an advantage. We find that such transfers are credible mechanisms to make the market more competitive so as to deter entry or force exit. We determine that with free entry such transfers are profitable and further it is optimal to predate or deter every firm possible so that a market with many firms can become a duopoly. While consumers are harmed by such action, production efficiency increases sufficient to cause welfare to increase.

Suggested Citation

  • Anthony Creane & Hideo Konishi, 2007. "The Unilateral Incentives for Technology Transfers: Predation by Proxy (and Deterrence)," Boston College Working Papers in Economics 677, Boston College Department of Economics, revised 19 Jun 2008.
  • Handle: RePEc:boc:bocoec:677
    Note: Previously circulated as "The Unilateral Incentives for Technology Transfers: Predation by Proxy"
    as

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    Cited by:

    1. Creane, Anthony & Ko, Chiu Yu & Konishi, Hideo, 2013. "Choosing a licensee from heterogeneous rivals," Games and Economic Behavior, Elsevier, vol. 82(C), pages 254-268.

    More about this item

    Keywords

    Predation; Technology Transfers;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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