Optimal contract under brand name collaboration

In an international Cournot duopoly, we determine the optimal contract for a brand name collaboration where the contract consists of fixed-fee and output royalty. We show that the firms always have the incentive for brand name collaboration. However, whether the optimal contract will have positive f...

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Bibliographic Details
Published inEconomic modelling Vol. 37; pp. 238 - 240
Main Authors Basak, Debasmita, Mukherjee, Arijit
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.02.2014
Elsevier Science Ltd
Subjects
Brand name collaboration
Brand names
Brands
Collaboration
Duopoly
Economic theory
Exports
Fixed-fee
Foreign direct investment
International trade
Royalties
Royalty
Studies
Willingness to pay
D43
Fixed-fee
Royalty
D45
Brand name collaboration
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Summary:In an international Cournot duopoly, we determine the optimal contract for a brand name collaboration where the contract consists of fixed-fee and output royalty. We show that the firms always have the incentive for brand name collaboration. However, whether the optimal contract will have positive fixed-fee and positive royalty is not immediate and it depends on the factors such as the transportation cost of exporting and the consumers' initial perception about the products of the firms reflected in the consumers' maximum willingness to pay for the products. Thus, our paper shows that the possibility of brand name collaboration is significantly more than predicted in the existing literature.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0264-9993
1873-6122
DOI:10.1016/j.econmod.2013.11.008