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Technology transfer in a linear city with symmetric locations

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  • Bouguezzi, Fehmi

Abstract

This paper compares patent licensing regimes in a Hotelling model where firms are located symmetrically and not necessary at the end points of the city. I suppose that one of the firms owns a process innovation reducing the marginal unit cost. This patent holding firm will decide to sell a license or not to the non innovative firm and will choose, when licensing, between a fixed fee or a royalty. The key difference between this paper and other papers is that here I suppose that firms are not static and can move along the linear city symmetrically. I find that when there is no licensing, Nash equilibrium exists only when innovation is non drastic. I also find that royalties licensing is better than fixed fee licensing when innovation is small. When the innovation is intermediate I find that fixed fee is better than a royalty. The paper shows that a fixed fee is not better than a non licensing regime independently of the innovation size and the optimal licensing regime is royalties when innovation is small. Finally, I show that a patent holding firm should not license its innovation when it is intermediate or drastic

Suggested Citation

  • Bouguezzi, Fehmi, 2010. "Technology transfer in a linear city with symmetric locations," MPRA Paper 21055, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:21055
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    File URL: https://mpra.ub.uni-muenchen.de/21055/1/MPRA_paper_21055.pdf
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    References listed on IDEAS

    as
    1. Mai, Chao-cheng & Peng, Shin-kun, 1999. "Cooperation vs. competition in a spatial model," Regional Science and Urban Economics, Elsevier, vol. 29(4), pages 463-472, July.
    2. Henry Wang, X., 2002. "Fee versus royalty licensing in a differentiated Cournot duopoly," Journal of Economics and Business, Elsevier, vol. 54(2), pages 253-266.
    3. Wang, X. Henry, 1998. "Fee versus royalty licensing in a Cournot duopoly model," Economics Letters, Elsevier, vol. 60(1), pages 55-62, July.
    4. Caroline Hussler & Andre Lorentz & Patrick Ronde, 2007. "Agglomeration and Endogenous Absorptive Capacities: Hotelling Revisited," Jena Economic Research Papers 2007-102, Friedrich-Schiller-University Jena.
    5. Ngo Van Long & Antoine Soubeyran, 1996. "R&D Spillovers and Location Choice under Cournot Rivalry," CIRANO Working Papers 96s-30, CIRANO.
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    Cited by:

    1. Bouguezzi, Fehmi, 2010. "Transfert de technologie dans une ville carrée à deux dimensions avec cout de transport quadratique," MPRA Paper 23158, University Library of Munich, Germany.

    More about this item

    Keywords

    Hotelling model; Technology transfer; Patent licensing;

    JEL classification:

    • L0 - Industrial Organization - - General
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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