Patent Licensing, Entry and the Incentive to Innovate
We analyze the economic impact of process innovations where the innovator auctions off licenses to both potential entrants and incumbent firms. It is shown that opening the market to entrant licensees, the incentive to innovate is maximized in a monopoly market as was envisioned by Schumpeter (1942). This is in contrast to previous literature on licensing of process innovations where entry is excluded. There the incentive to innovate is maximized in oligopoly market if licenses are sold by auction (Sen and Tauman (2007)) or in competitive market if licenses are sold by royalty (Arrow (1962)). The post-innovation market structure, the diusion of the innovation and the social welfare are analyzed and compared with the case where entry is excluded.
|Date of creation:||2017|
|Contact details of provider:|| Postal: Stony Brook, NY 11794-4384|
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- Sen, Debapriya & Tauman, Yair, 2007.
"General licensing schemes for a cost-reducing innovation,"
Games and Economic Behavior,
Elsevier, vol. 59(1), pages 163-186, April.
- Debapriya Sen & Yair Tauman, 2002. "General licensing schemes for a cost-reducing innovation," Department of Economics Working Papers 02-03, Stony Brook University, Department of Economics.
- Morton I. Kamien & Yair Tauman, 1986. "Fees Versus Royalties and the Private Value of a Patent," The Quarterly Journal of Economics, Oxford University Press, vol. 101(3), pages 471-491.
- 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.
- Michael L. Katz & Carl Shapiro, 1985. "On the Licensing of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 504-520, Winter.
- Heidrun C. Hoppe & Philippe Jehiel & Benny Moldovanu, 2006. "License Auctions and Market Structure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 371-396, June.
- Jehiel, Philippe & Moldovanu, Benny, 2000. "License Auctions and Market Structure," CEPR Discussion Papers 2530, C.E.P.R. Discussion Papers.
- Jehiel, Philippe & Moldovanu, Benny, 2000. "License Auctions and Market Structure," Papers 01-21, Sonderforschungsbreich 504.
- Hakenes, Hendrik & Schnabel, Isabel, 2000. "License Auctions and Market Structure," Sonderforschungsbereich 504 Publications 01-21, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Heidrun C. Hoppe & Philippe Jehiel & Benny Moldovanu, 2006. "License auctions and market structure," Post-Print halshs-00754153, HAL.
- Michael L. Katz, 1986. "An Analysis of Cooperative Research and Development," RAND Journal of Economics, The RAND Corporation, vol. 17(4), pages 527-543, Winter.
- Kamien, Morton I. & Oren, Shmuel S. & Tauman, Yair, 1992. "Optimal licensing of cost-reducing innovation," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 483-508. Full references (including those not matched with items on IDEAS)
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