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Innovation, Competition, and Incomplete Adoption of a Superior Technology

Author

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  • Luca Sandrini

    () (DSEA, University of Padova)

Abstract

This article analyses the licensing choices of an outside inventor who owns a patent for a superior cost-saving technology. Moreover, I show that licensing via uniform upfront fees is found to be superior to licensing via royalties, from the inventor perspectives. This is so, regardless of the number of manufacturers in the product market, as downstream competition fosters the inventor's incentives to develop a more effective cost-saving technology, raising his/her revenues from surplus extraction. Moreover, this article investigates the effect of competition on licensing outcomes and ex-post market concentration.

Suggested Citation

  • Luca Sandrini, 2020. "Innovation, Competition, and Incomplete Adoption of a Superior Technology," "Marco Fanno" Working Papers 0251, Dipartimento di Scienze Economiche "Marco Fanno".
  • Handle: RePEc:pad:wpaper:0251
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    File URL: https://economia.unipd.it/sites/economia.unipd.it/files/20200251.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Innovation; Licensing; Vertical Relation; Oligopoly; Competition;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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