Technology Licensing Strategy Research Articles

Green technology licensing: Evaluating government subsidies based on different efficiency levels across competitors

AbstractGreen technology development results in manufacturers in traditional industries reducing carbon emissions to alleviate pressure on the ecological environment. Some manufacturers efficiently adopt this green technology and some do not. An effective green technology licensing strategy can promote the diffusion of technology from highly efficient manufacturers to those who are less efficient. The government has implemented subsidies to promote green technology among manufacturers. Manufacturers with high levels of technology efficiency should obtain a high level of licensing income; however, it is unclear whether these licensing rewards are effective, especially in the face of fierce market competition. What is the government's optimal subsidy policy to address this problem? In this study, given a possible government subsidy, we develop a game theory model that includes Manufacturer H, with relatively high green technology investment efficiency, and Manufacturer L, with low levels of efficiency. The two manufacturers engage in a two‐dimensional competition in green technology investment and sales volume. We examine the manufacturers' profitability with and without green technology licensing, called Scenario Y and Scenario N, respectively. We identify “win–win” situations for the two competing manufacturers. Specifically, the government should increase the subsidy when the efficiency of industrial green investment is low, Manufacturer L has a clear disadvantage with respect to efficiency, and the competition is fierce.

Strategic Licensing of Green Technologies to a Brown Rival: A Game Theoretical Analysis

This paper studies a green manufacturer’s strategic licensing of its green technology to a brown rival under the consideration of the green manufacturer’s environmental concerns. Consumers in the market have green awareness. Adopting the green technology not only helps manufacturers to reduce carbon emissions, but also to increase market sizes. The green manufacturer can choose from three technology licensing strategies, i.e., no licensing (N), royalty licensing (R) or fixed-fee licensing (F). The equilibrium licensing strategy can be derived by comparing the respective payoff after adopting the three strategies. It is found that the green manufacturer should choose fixed-fee licensing strategy when the market size expansion effect is strong, and the competition intensity is moderate; otherwise, the green manufacturer should choose royalty licensing strategy. Furthermore, it is found that when the green manufacturer is more concerned about environmental impacts, it will be more willing to choose fixed-fee licensing strategy, rather than royalty licensing strategy. Through numerical tests, some interesting results are also found. For example, the brown manufacturer might be hurt even if the cost reduction effect of technology licensing is relatively stronger. Moreover, it is found that consumer surplus and social welfare nonmonotonically change with the substitution level. In summary, this research tries to provide some guidelines to the industry and the society on better managing green technology diffusions.

Technology licensing strategies for three cost-differential manufacturers

This research investigates cost-efficient manufacturer technology licensing strategies for three cost-differential manufacturers that produce partially substitutable products. Among a technology innovator, a mid-cost manufacturer, and a high-cost manufacturer; four strategies are considered including: competition; licensing of the technology by the innovator to either the mid- or high-cost manufacturer exclusively; and licensing of the technology to both the mid- and high-cost manufacturers. Following the modeling framework of an oligopolistic competition, we derive the equilibrium solutions for the alternative licensing strategies and explore the optimal strategy by evaluating the profits of the licensor, licensee(s) and unlicensed manufacturer in the different licensing models. We find that each of the four licensing strategies has the potential to deliver the best economic performance, but the optimal strategy in a given situation depends on the unit production cost differences among the three manufacturers. The underlying principle that determines it is the trade-off between the economic gain and loss from technology licensing, which is influenced by differences in production costs, market competition intensity, and the power relationship between licensor and licensee(s). Licensing coopetition between an innovator and a licensee could force an unlicensed manufacturer to exit the market, highlighting the interactive effect of coopetition in a triad. We also find that licensing cost-reducing technology among competitors will always improve social welfare compared with competition. Although the improvement in social welfare is mainly driven by increased economic performance of the manufacturers, it is not necessarily at the expense of customers with decreased consumer surplus.

OPTIMAL LICENSING STRATEGY OF GREEN TECHNOLOGY WITH CORPORATE SOCIAL RESPONSIBILITY

This study investigates the green technology licensing strategies of firms with corporate social responsibility (CSR) in a duopoly market. The results show that in the absence of CSR, the optimal licensing contract is fixed-fee licensing for a patent holding firm. In the precent of CSR, the optimal licensing contract for a patent holding firm switches from fixed-fee licensing to royalty licensing with increasing level of CSR if the reduction cost of emissions is high. Moreover, we show that the profit goal of firm and the social welfare goal of government are not always mutually exclusive. If the level of CSR is low, a uniform licensing contract would be preferable. If the level of CSR is high, the optimal licensing contract is inconsistent. Finally, we show that CSR is not always beneficial to the social welfare while CSR benefits the environment. Social welfare benefits from increased CSR degree, but vice versa is true when CSR degree decreases. This research may provide valuable insights into licensing and CSR literature.

Low-carbon technology transfer between rival firms under cap-and-trade policies

We investigate the effects of low-carbon technology transfer between two rival manufacturers on their economic, environmental, and social welfare performance under a cap-and-trade policy. We model alternative licensing arrangements of technology transfer and evaluate the model performance from the perspectives of different stakeholders, including manufacturers, customers, and policy makers. Our findings show that the contractual choice on low-carbon technology licensing is dependent on the trade-off between the benefits gained from the licensing of technology and the consequential losses incurred from competition with a strengthened competitor, which is influenced by a combination of factors, including internal technological abilities, the interfirm power relationship, external market competition, and the carbon emission control policy. Among them, the interfirm power relationship is most influential in determining the optimal contractual decision. In addition, we extend the analysis of technology licensing strategies to different carbon emissions caps with additional cost incurred from purchasing emission allowances through auction, and a two-period model considering emissions cap reduction, respectively. Finally, our analyses show it is critical for policy makers to develop appropriate emissions control policies to promote the agenda of a sustainable, low-carbon economy.

A decision model for competitive remanufacturing systems considering technology licensing and product quality strategies

Abstract Fast maturation and obsolescence of electronics have caused the accumulation of untreated Waste Electrical and Electronic Equipment (WEEE), which results in environmental issues around the globe. Accordingly, remanufacturing systems have been developed to recover or perform proper disposal of WEEE. Over the decades, remanufacturing has continuously grown and has attracted customers' interest in reprocessed products, hence, inducing the competition of the said market. For a remanufacturer to gain a competitive advantage in the market, it is necessary to optimize both operational and managerial aspects comprehensively. Therefore, this study aims to model the competition between independent remanufacturer player's (IR) supply chain systems that integrate these two aspects. First, IR's supply chain system operational decisions involving multi-period-horizon and multi-process production planning, product flow, and product purchasing and takeback will be formulated into a mixed integer linear model. Lastly, IRs' supply chain system compete with each other in a perfect-market-competition game model that considers technology licensing and product quality strategies. Results from numerical examples show that royalty licensing is the better technology licensing strategy compared to fixed-fee licensing strategy in terms of costs. In addition, selling remanufactured products, which are of higher quality, yield less profit than selling refurbished products. However, remanufactured products are less susceptible to product value depreciation and price changes over time, therefore, generating more stable income in different conditions. With the fast-paced technological development, the proposed model could address complex remanufacturing supply chain problems, offering decision-makers a tool in optimizing the remanufacturing system.

The optimal technology licensing strategy under supply disruption

We study the problem of whether and how a patent-holding firm (supplier S1) should license its technology patent to a potential rival (supplier S2). If the license is given, the two suppliers both produce a critical component for their downstream manufacturer simultaneously (sequentially) when the manufacturer adopts a dual (contingent) sourcing mode. However, both suppliers face risks of complete supply disruptions. In the study, we examine how the supply risk affects S1's technology licensing willingness and under which conditions royalty or fixed-fee licensing is its optimal strategy. The results show that when the manufacturer adopts contingent sourcing, S1 is always willing to license its technology to S2 and fixed-fee licensing is the optimal strategy. However, when dual sourcing is adopted, either royalty and fixed-fee licensing could be S1's optimal licensing strategy, depending on the reliability degree of the suppliers’ productions. Our findings extend the conclusion from previous researchers about royalty and fixed-fee licensing in a Cournot duopoly model.

Technology Licensing Strategy for Network Product in a Service Industry

Technology licensing has gained significant attention in literature and practice as a rapid and effective way to improve firm’s capability of technology innovation. In this paper, we investigate a duopolistic service provider competition market, where service providers develop and sell a kind of network product. In this setting, we analyze the innovating service provider’s four licensing strategies: no licensing, fixed fee licensing, royalty licensing, and two-part tariff licensing. The literature suggests that when the network products can be completely substituted, two-part tariff licensing is the optimal strategy of the innovating service provider. We find that when the network products cannot be completely substituted, two-part tariff licensing is not always optimal. The degree of the product differentiation, the intensity of the network effects, and the R&D cost of the potential licensee play a key role in determining the innovating service provider’s optimal licensing strategies.

RETRACTION NOTICE: Technology licensing strategies: the interaction of process and content characteristics

The article ‘Technology licensing strategies: the interaction of process and content characteristics’ by Ulrich Lichtenthaler and Holger Ernst, published in STRATEGIC ORGANIZATION Vol 7(2): 183–221, DOI: 10.1177/1476127009102672, has been retracted at the author’s and editors’ request due to errors in reporting, for which the first author has claimed responsibility.