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A Dynamic Analysis of Licensing: The "Boomerang" Effect and Grant-Back Clauses

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  • Jay Pil Choi

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Abstract

This paper develops an incomplete contract model of the licensing relationship to analyze the dynamic effects of licensing on R& D competition in the innovation market and to examine the rationale for often observed grant-back clauses. Of particular concern are how the consideration of future competition distorts the licensing relatoinship and how the "grant-back" clause cna mitigate this distortion. I also evaluate the validity of the casual antitrust argument that grant-back clauses may adversely affect competition because they reduce the licensee's incentive to engage in R&D and thereby limit rivlry in innovation markets.

Suggested Citation

  • Jay Pil Choi, 1999. "A Dynamic Analysis of Licensing: The "Boomerang" Effect and Grant-Back Clauses," Working Paper Series no16, Institute of Economic Research, Seoul National University.
  • Handle: RePEc:snu:ioerwp:no16
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    3. Jay Pil Choi, 2002. "A Dynamic Analysis of Licensing: The "Boomerang" Effect and Grant-Back Clauses," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 203-229, August.
    4. David J. Teece, 2008. "Technology Transfer By Multinational Firms: The Resource Cost Of Transferring Technological Know-How," World Scientific Book Chapters,in: The Transfer And Licensing Of Know-How And Intellectual Property Understanding the Multinational Enterprise in the Modern World, chapter 1, pages 1-22 World Scientific Publishing Co. Pte. Ltd..
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    1. repec:dau:papers:123456789/7117 is not listed on IDEAS
    2. Jay Pil Choi, 2002. "A Dynamic Analysis of Licensing: The "Boomerang" Effect and Grant-Back Clauses," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 203-229, August.
    3. Marie-Laure Cabon-Dhersin & Rim Lahmandi-Ayed, 2011. "R&D Organization: Cooperation or Cross-Licensing?," Recherches économiques de Louvain, De Boeck Université, vol. 77(1), pages 31-52.
    4. Marx, Matt & Hsu, David H., 2015. "Strategic switchbacks: Dynamic commercialization strategies for technology entrepreneurs," Research Policy, Elsevier, vol. 44(10), pages 1815-1826.
    5. Rockett, Katharine, 2010. "Property Rights and Invention," Handbook of the Economics of Innovation, Elsevier.
    6. Tannista Banerjee & Arnab Nayak, 2017. "Why trash don’t pass? pharmaceutical licensing and safety performance of drugs," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(1), pages 59-71, January.
    7. Suzuki, Keishun, 2017. "Patent Protection, Optimal Licensing, and Innovation with Endogenous Entry," MPRA Paper 82712, University Library of Munich, Germany.
    8. Anthony Creane & Hideo Konishi, 2009. "Goldilocks and the Licensing Firm: Choosing a Partner when Rivals are Heterogeneous," Boston College Working Papers in Economics 720, Boston College Department of Economics.
    9. Gordanier, John & Miao, Chun-Hui, 2011. "On the duration of technology licensing," International Journal of Industrial Organization, Elsevier, vol. 29(6), pages 755-765.
    10. Jean-François Sattin, 2016. "Exploring the survival of patent licensing: some evidence from French foreign agreements," The Journal of Technology Transfer, Springer, vol. 41(3), pages 610-630, June.
    11. R�gibeau, P & Rockett, K, 2004. "The Relationship Between Intellectual Property Law and Competition Law: An Economic Approach," Economics Discussion Papers 2851, University of Essex, Department of Economics.

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