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Growth and Welfare Effects of Interventions in Patent Licensing Negotiations

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  • Kishimoto, Shin
  • Suzuki, Keishun

Abstract

Policy makers sometimes intervene in patent licensing negotiations to guide licensing fees, but the impacts of such interventions on economic growth and welfare are relatively unknown. This paper develops a novel Schumpeterian growth model featuring a cooperative game-theoretic framework that describes negotiations about licensing fees. We find that the growth effect of intervention is negative if firms can raise unlimited external funds for their R&D investment. However, when the amount of external funds available is limited, both the growth and the welfare effects of intervention can be positive. This result means that interventions are desirable when the internal funds of firms are the main source of their R&D investment.

Suggested Citation

  • Kishimoto, Shin & Suzuki, Keishun, 2021. "Growth and Welfare Effects of Interventions in Patent Licensing Negotiations," MPRA Paper 108009, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:108009
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    References listed on IDEAS

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    More about this item

    Keywords

    Patent licensing negotiations; Schumpeterian growth; Cooperative game; Patent protection; Financial constraints.;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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