Bargaining with Externalities: Licensing of an Innovation
The objective of this paper is to analyze the relationship between bargaining organizational forms and the licensing of cost-reducing innovations, in order to assess the patent holders optimal policy as well as their welfare properties. Trading mechanisms based on bargaining models with voluntary matching become more relevant when the market for an innovation is small. Our main findings are that when we exclude the use of a reservation price different to the continuation value of the game, it is no longer true that the auction mechanism yields always higher profits to the patentee than a fixed fee. Furthermore, the patent holder prefers the take-it-or-leave-it to the fixed fee, the alternating bids or the simultaneous bids mechanism. Also, bargaining mechanisms allow the patentee to overcome the credibility problem associated with the reservation price. Regarding the social viewpoint (a social agency maximizing the domestic welfare under the assumption that the patentee is a foreign laboratory), it is the best the licensing through the simultaneous bids mechanism. Moreover, licensing through the take-it-or-leave-it is better than licensing through auction mechanisms.
|Date of creation:||01 May 1997|
|Date of revision:|
|Contact details of provider:|| Postal: |
Fax: +32 10473945
Web page: http://www.uclouvain.be/ires
More information through EDIRC
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.:
- Katz, Michael L & Shapiro, Carl, 1986. "How to License Intangible Property," The Quarterly Journal of Economics, MIT Press, vol. 101(3), pages 567-89, August.
- Ebbe Groes & Torben Tranæs, 1989.
"Sequential Bargaining in a Market with One Seller and Two Different Buyers,"
89-22, University of Copenhagen. Department of Economics.
- Hendon, Ebbs & Tranaes, Torben, 1991. "Sequential bargaining in a market with one seller and two different buyers," Games and Economic Behavior, Elsevier, vol. 3(4), pages 453-466, November.
- Kamien, Morton I & Tauman, Yair, 1986.
"Fees versus Royalties and the Private Value of a Patent,"
The Quarterly Journal of Economics,
MIT Press, vol. 101(3), pages 471-91, August.
- Morton I. Kamien & Yair Tauman, 1984. "Fees Versus Royalties and the Private Value of a Patent," Discussion Papers 583, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Kamien, Morton I., 1992. "Patent licensing," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 11, pages 331-354 Elsevier.
- Jehiel, Philippe & Moldovanu, Benny, 1995.
"Cyclical Delay in Bargaining with Externalities,"
Review of Economic Studies,
Wiley Blackwell, vol. 62(4), pages 619-37, October.
- Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
- Ebbe Hendon & Birgitte Sloth & Torben Tranæs, 1994.
"Decentralized trade with bargaining and voluntary matching,"
Review of Economic Design,
Springer, vol. 1(1), pages 55-77, December.
- : Ebbe Hendon & Birgitte Sloth & Torben Tranæs, 1993. "Decentralized Trade with Bargaining and Voluntary Matching," Discussion Papers 93-08, University of Copenhagen. Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:ctl:louvir:1997007. 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: (Anne DAVISTER-LOGIST)
If references are entirely missing, you can add them using this form.