Managing licensing in a market for technology
Over the last decade, companies have paid greater attention to the management of their intellectual assets. We build a model that helps understand how licensing activity should be organized within large corporations. More specifically, we compare decentralization—where the business unit using the technology makes licensing decisions—to centralized licensing. The business unit has superior information about licensing opportunities but may not have the appropriate incentives because its rewards depend upon product market performance. If licensing is decentralized, the business unit forgoes valuable licensing opportunities since the rewards for licensing are (optimally) weaker than those for product market profits. This distortion is stronger when production-based incentives are more powerful, making centralization more attractive. Growth of technology markets favors centralization and drives higher licensing rates. Our model conforms to the existing evidence that reports heterogeneity across firms in both licensing propensity and organization of licensing.
|Date of creation:||Jul 2012|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Arora, Ashish & Fosfuri, Andrea, 2003.
"Licensing the market for technology,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 52(2), pages 277-295, October.
- Nancy T. Gallini & Brian D. Wright, 1990. "Technology Transfer under Asymmetric Information," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 147-160, Spring.
- Dilip Mookherjee, 2006.
"Decentralization, Hierarchies, and Incentives: A Mechanism Design Perspective,"
Journal of Economic Literature,
American Economic Association, vol. 44(2), pages 367-390, June.
- Dilip Mookherjee, 2005. "Decentralization, Hierarchies and Incentives: A Mechanism Design Perspective," Boston University - Department of Economics - Working Papers Series WP2005-034, Boston University - Department of Economics, revised Sep 2005.
- Athreye, Suma & Cantwell, John, 2007.
"Creating competition?: Globalisation and the emergence of new technology producers,"
Elsevier, vol. 36(2), pages 209-226, March.
- Suma Athreye & John Cantwell, 2005. "Creating Competition? Globalisation and the emergence of new technology producers," Open Discussion Papers in Economics 52, The Open University, Faculty of Social Sciences, Department of Economics.
- Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
- Alfonso Gambardella & Paola Giuri & Alessandra Luzzi, 2006.
"The Market for Patents in Europe,"
LEM Papers Series
2006/04, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Ashish Arora & Alfonso Gambardella, 2010. "Ideas for rent: an overview of markets for technology," Industrial and Corporate Change, Oxford University Press, vol. 19(3), pages 775-803, June.
- Robert Gibbons & Joseph Farrell, 1988.
"Cheap Talk Can Matter in Bargaining,"
482, Massachusetts Institute of Technology (MIT), Department of Economics.
- Joseph Farrell and Robert Gibbons., 1988. "Cheap Talk Can Matter in Bargaining," Economics Working Papers 8863, University of California at Berkeley.
- Farrell, Joseph & Gibbons, Robert, 1988. "Cheap Talk Can Matter in Bargaining," Department of Economics, Working Paper Series qt3qz786xq, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Katharine E. Rockett, 1990. "Choosing the Competition and Patent Licensing," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 161-171, Spring.
- Ashish Arora & Marco Ceccagnoli, 2006. "Patent Protection, Complementary Assets, and Firms' Incentives for Technology Licensing," Management Science, INFORMS, vol. 52(2), pages 293-308, February.
- Aghion, Philippe & Howitt, Peter & Violante, Giovanni L, 2002.
"General Purpose Technology and Wage Inequality,"
Journal of Economic Growth,
Springer, vol. 7(4), pages 315-45, December.
- Kamien, Morton I & Tauman, Yair, 2002. "Patent Licensing: The Inside Story," Manchester School, University of Manchester, vol. 70(1), pages 7-15, January.
- Wouter Dessein & Luis Garicano & Robert Gertner, 2010.
"Organizing for Synergies,"
American Economic Journal: Microeconomics,
American Economic Association, vol. 2(4), pages 77-114, November.
- Ashish Arora & Sharon Belenzon & Luis A. Rios, 2011. "The Organization of R&D in American Corporations: The Determinants and Consequences of Decentralization," NBER Working Papers 17013, National Bureau of Economic Research, Inc.
- Michael H. Riordan & David E. M. Sappington, 1987. "Information, Incentives, and Organizational Mode," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 243-263.
- Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
- Arora, Ashish & Gambardella, Alfonso, 2010. "The Market for Technology," Handbook of the Economics of Innovation, Elsevier.
- Neus Palomeras, 2007. "An Analysis of Pure-Revenue Technology Licensing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(4), pages 971-994, December.
- Gans, Joshua S. & Stern, Scott, 2003. "The product market and the market for "ideas": commercialization strategies for technology entrepreneurs," Research Policy, Elsevier, vol. 32(2), pages 333-350, February.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:9048. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.