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Patent and Knowhow Licensing in Japan (Japanese)

  • NISHIMURA Junichi
  • OKADA Yosuke
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    Over the past two decades, utilizing markets for technology through licensing and other outsourcing arrangements has emerged as a key to organizing innovative activity. We examine how the rent dissipation effect affects patent and knowhow licensing, controlling organizational capabilities such as firm size, vertical integration, exports, and diversity. A licensor's profit varies and the incentives to license change depending on the rent dissipation effect, which erodes a licensor's profit due to intensifying competition that results from a licensee's entry into the licensor's market. Firms faced with severe competition are marginally exposed to a small rent dissipation effect when licensing their technologies out to rivals, and they can obtain large royalty revenues through such licensing because there are many potential licensees. Using panel data on about ten thousand Japanese firms for the period 1995-2007, we show that the rent dissipation effect facilitates licensing not only between Japanese firms but also between Japanese and foreign firms.

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    File URL: http://www.rieti.go.jp/jp/publications/dp/11j012.pdf
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    Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion Papers (Japanese) with number 11012.

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    Length: 42 pages
    Date of creation: Feb 2011
    Date of revision:
    Handle: RePEc:eti:rdpsjp:11012
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