Abstract
Optimally licensing contract are considered for a cost-reducing innovation in a durable-good duopoly for outside innovator. It is shown that (a) license to two firms is better than license to one firm. (b) The licensing contract involving a fixed fee alone can never be optimal in the case of licensing to two firms. (c) when profit opportunities (measured by the ration of the demand and the marginal cost) are large, the optimal licensing contract involves royalty alone regardless the degree of the innovation, while profit opportunities are small, the patent holder employ two-part tariff contract depending on the degree of the innovation and the nature of competition.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
