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Licensing by a monopolist and unionized labor market

Author Info

  • Mukherjee, Soma
  • Broll, Udo
  • Mukherjee, Arijit

Abstract

We show that a monopolist final goods producer may find it profitable to create competition by licensing its technology if the input market is imperfectly competitive. With a centralized union, we show that licensing by a monopolist is profitable under both uniform and discriminatory wage settings by the union. However, the incentive for licensing is higher under the former situation. We also show that licensing by the monopolist is profitable under both quantity and price competition, and the incentive for licensing is higher under price competition than under quantity competition. Our qualitative results hold even with decentralized unions.

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File URL: https://econstor.eu/bitstream/10419/22750/1/DDPE200709.pdf
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Paper provided by Dresden University of Technology, Faculty of Business and Economics, Department of Economics in its series Dresden Discussion Paper Series in Economics with number 09/07.

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Date of creation: 2007
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Handle: RePEc:zbw:tuddps:0907
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Phone: ++49 351 463 2196
Fax: ++49 351 463 7739
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More information through EDIRC

Keywords: Licensing; Labor union; Price competition; Quantity competition;

Find related papers by JEL classification:

  • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
  • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
  • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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  8. Mukherjee, Arijit, 2005. "Price and quantity competition under free entry," Research in Economics, Elsevier, vol. 59(4), pages 335-344, December.
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  11. Bughin, Jacques & Vannini, Stefano, 1995. "Strategic direct investment under unionized oligopoly," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 127-145, March.
  12. Joseph Farrell and Nancy T. Gallini., 1987. "Second-Sourcing as a Commitment: Monopoly Incentives to Attract Competition," Economics Working Papers 8760, University of California at Berkeley.
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  16. Acharyya, Rajat & Marjit, Sugata, 1998. "To Liberalize or Not to Liberalize an LDC-Market with an Inefficient Incumbent," International Review of Economics & Finance, Elsevier, vol. 7(3), pages 277-296.
  17. Zhao, Laixun, 1995. "Cross-hauling direct foreign investment and unionized oligopoly," European Economic Review, Elsevier, vol. 39(6), pages 1237-1253, June.
  18. Justus Haucap & Christian Wey & Uwe Pauly, 1999. "The Incentives of Employers’ Associations to Raise Rivals’ Costs in the Presence of Collective Bargaining," CIG Working Papers FS IV 99-06, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  19. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, December.
  20. Nickell, S J & Andrews, M, 1983. "Unions, Real Wages and Employment in Britain 1951-79," Oxford Economic Papers, Oxford University Press, vol. 35(0), pages 183-206, Supplemen.
  21. Anand, Bharat N & Khanna, Tarun, 2000. "The Structure of Licensing Contracts," Journal of Industrial Economics, Wiley Blackwell, vol. 48(1), pages 103-35, March.
  22. Yoshihiro Yoshida, 2000. "Third-Degree Price Discrimination in Input Markets: Output and Welfare," American Economic Review, American Economic Association, vol. 90(1), pages 240-246, March.
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